InvestorQ : Gold is better or Fixed Deposit for long term savings?
Radhika Arya made post

Gold is better or Fixed Deposit for long term savings?

Tanu Shukla answered.
2 years ago
If saving is your only motive, then you are not in a capacity to lose your principal amount. Let us understand both options in detail:

Gold investment: This investment involves buying gold in physical form and keeping it with you. If you buy gold in the form of jewelry, you have to pay making charges and it is also not the purest form of Gold. You can keep with you as long as you want. However, there is no surety at what rate the prices will increase and what return will it provide. Also, there are chances of theft, loss and physical wear and tear. There are no certainties under this investment. However, there is an alternative to physical gold investment and that is Sovereign Gold Bonds.

Sovereign Gold Bonds: This is a scheme offered by the Government of India and RBI for those who want to invest in gold but want to avoid the hassle of paying making charges. Under this scheme, one can own gold in the form of a certificate instead of a solid gold form. This type of investment is suitable for those investors who have a low-risk appetite. This type of investment also gives investors fixed income annually or half-yearly, varies according to the scheme. 
The interest rate that is currently being offered on these bonds varies around 2.4-2.5% per annum. These bonds require low-investment and low-risk and that is what is more attractive to the investors and the maturity period is a minimum of 8 years.
Fixed Deposit: The best part about investment in Fixed deposits is that there is very minimal risk associated with it. Since the facility is backed by the banks, the money is safest. The return ranges between 6-8% and varies bank to bank and age of investors. There’s no drawback for investment in Fixed deposits, but the returns are not very attractive and you do not earn interest on interest earned, which makes it less attractive.

However, if you have more money and you need good options to park it, my suggestion would be to diversify your investment. Don’t place your money in a single place. Decide what amount will you need to be the safest, put it in Fixed deposits and Sovereign gold bonds. Now, that extra money on which you can take a little risk, invest in options like mutual funds or stock markets to have better returns. But, just be sure about your risk profile.