Investors often get entangled between two traditional options in search of financial security and better returns. One, fixed deposit (FD) and the other gold. While FD is a safe and fixed interest option, gold also maintains its glow in economic uncertainties. But the changing markets in 2025, rising inflation and interest rates fluctuations have made the question even more important to invest in FD and gold? Let us understand both options, so that you can get some help in taking decisions related to investment.
What is FD investment
Fixed deposit ie FD is a financial instrument in which you deposit your amount at a fixed interest rate for the fixed time. When the FD period is completed, you also get a lump sum with the interest fixed along the principal. If you want, you can also get interest on monthly, quarter or maturity of FD. FD is considered a safe investment option as it is not affected by the market uproar and gives fixed returns.
Investment in gold
Investment in gold in India is considered auspicious and people often buy gold on occasions like Diwali, Dhanteras or Akshaya Tritiya. According to investment experts, investment in gold not only gives good returns but also balances the risk of your investment portfolio. In today’s time, there are many options available in gold- such as gold funds, funds of funds, gold exchange-traded funds and gold bonds etc.
FD Vs Gold: Better returns, low risk and more liquidity in which?
Possibility of returns
According to Bankbazaar, gold has been a high -return investment in a long period, especially when inflation is increasing. At the same time, returns in FD are fixed and predetermined, which are fixed at the time of investment. The major advantage of FD is that there is a risk -free return on the deposit amount. Senior citizens get additional benefits of high interest rate.
risk level
Gold prices may be up-to-low in a short duration, but as long term it gives stable and reliable returns. This is a good means of preventing inflation and decline in currency. Conversely, FD does not have any market risk. The return is completely safe and based on a time period, the longer the period, the higher returns.
Loan facility
On both gold and FD, you can get a loan of up to 80% of the total value. Both banks and NBFCs offer this facility. However, interest rates on these are slightly higher than the personal loan.
Liquidity means liquidity
Gold is considered a highly liquid investment. You can buy it in many ways like Gold ETF, Digital Gold or Sovereign Gold Bond. Its withdrawal depends on the market value. FD also has liquidity, but is accompanied by predetermined conditions. In most cases, premature FD breaking is penalty.
Duration of investment
There is no fixed period of investment in gold. It depends on what medium you have invested (eg Gold ETF or Physical Gold). FD usually occurs for a period of 7 days to 10 years, and the flexibility of its duration depends on the policy of the bank or institution.
Tax system
The benefit from gold investment comes under capital gains tax, and it can take advantage of indexation benefit. While the interest from FD is completely taxable, and it has a deduction of TDS, which is added to your taxable income.
Income generating ability
Gold does not generate any regular income, but the long term in its price can make assets for you. In Fadi you can opt for monthly or quarterly interest payment, allowing you to get a stable income source.
So overall, both gold and FD are low -risk investment options and give guaranteed returns. Investing in gold provides high returns as well as the facility to buy and sell it easily. If you want to get good returns over time and save tax, then you should invest in gold. FDs provide less but stable returns and are not affected by market fluctuations. So you invest according to your cash needs, financial goals and the ability to take risks.
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