In a comparison between Fixed Deposits and equities, most experts believe that each has its own role to play in your financial portfolio. Fixed Deposits are a very secure form of investment, but do come with their own share of pitfalls. For instance, if your Fixed Deposits offer an interest rate of 8.5%, this value drops significantly after taxes to around 7%. This is one of the major drawbacks of FD —they are a taxable form of income. Not only that, Fixed Deposits are also subject to the whims of inflation. And if the inflation rate is higher than the return on your Fixed Deposits, you will lose money instead of gaining it. Though FDs offer reliability in terms of interest, an investor has to keep a watch on tax and inflation to make the most of them.

Equities are not averse from negative returns either. The riskiest factor about investing in equities is the instability of the market. Investing in equities is often termed as another form of gambling, although there are certain markers that can guide you down the right path and increase the probability of ensuring high returns. However, unless you are stock market-savvy, chances are equities won’t guarantee you hefty profits.

The solution to these problems is diversifying your portfolio to include both equities and Fixed Deposits. This is because although both have their own set of drawbacks, they also offer unique benefits that can help you increase your finances when implemented properly.

Strike the right balance between equity and FDs to ensure higher returns on investment

Here’s how you can plan your investment efficiently with equity and Fixed Deposits:

Invest About Half of Your Savings in Fixed Deposits

FDs can be very effective in the short term. Unlike equities, they do not depend on market fluctuations, which means you are guaranteed a fixed amount of returns without any sort of uncertainty. They are also immune to any volatility experienced by other forms of investment in terms of rate of interest. A prudent and cautious individual will always set aside a part of his investment for FD’s due to these reasons. Besides, Fixed Deposits nowadays offer a much higher rate of interest for senior citizens fd, which is beneficial for retired investors looking to receive a fixed return. Furthermore, Fixed Deposits can now be managed conveniently through online accounts and do not require you to add any stress or hassle to your daily schedule.

Invest the other half in Equities

Equities are a great form of investment if you are looking for long-term benefits. Just remember not to risk too much or too little, because both will end up leading you to disappointment and heartache. In the initial years of your equity investment, you are likely to experience a dip in your returns, but years of market research and trends suggest that in the end, equities always provide much higher returns as compared to Fixed Deposits. Equities also offer a wide variety in terms of investment options—you can choose between Diversified funds, Sector Funds, and Index based funds to experiment and choose your favourite option.


In the end, it’s important to remember that diversification of your portfolio into equity and Fixed Deposits gives you the highest chance of achieving efficient growth and ensuring a good return on your investments.

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