Why fixed deposits cant be compared with mutual funds?
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Fixed deposit can't be compare with mutual funds because fixed deposit is fixed but mutual funds is not fixed
Equity mutual funds and fixed deposits are vastly different instruments with diverging goals. Hence, they cannot be compared. Equity mutual funds vs. fixed deposit is pretty much the same comparison- a trade-off between risk and returns. A fixed deposit is a loan to banks, NBFCs, or companies that will be returned as per the decided tenure at a pre-decided interest rate.
The interest on the FD is fixed. Equity mutual funds, on the other hand, invests in equities, betting on the future potential of certain companies. There is absolutely no certainty or fixed return you can expect from here. Capital protection is not guaranteed. It’s a risk that an investor takes. Thus, you can’t compare the instruments.