For investors looking for risk-free investment avenues, Fixed Deposits (FDs) and Gold are among the best options available in the market today. Before deciding on which one to choose, investors need to align their financial goals and the expected performance for each of these investment options.
Traditionally in India, gold is seen as an auspicious asset with good gains and acts as a haven during a financial crisis. For many, this yellow metal is seen as a sign of prosperity and is popular not only for financial reasons but for cultural reasons as well. On the other hand, Fixed Deposit is one of the safest and risk-free investment options offered by both banks and companies. A major difference between both these is that the rate of gold tends to fluctuate constantly while on the other hand, FDs guarantee pre-defined returns.
Below are a few criteria on which Gold and Fixed Deposits differ from each other:
Risk, Market Nature and Safety: Both gold and FDs are safe investment avenues. The price of gold is impacted by multiple factors such as the supply of gold, rate of the US dollar, import, international trade relations and economic factors. Though there are chances that in high market volatility the price of gold is most likely to increase, any fall noticed would mean that the investment in gold is stuck. The risk is slightly high when it comes to investing in gold as the performance of the metal cannot be predicted.
On the other hand, investment in Fixed Deposits are independent of market influence and comes with almost no risk. Different banks and financial companies offer different rates of interest to the customer. The rate of interest offered remains constant during the tenure of the deposit.
The flexibility of investment term: While deciding to invest in gold, investors can choose from Gold ETFs (Exchange Traded Funds), Gold Equity or Gold Bullion. The duration of investment for each of these investment options differ. One may also choose to invest in gold in the physical form itself. While investing in Fixed Deposits, one can choose anything between 7 to 10 years depending on what the bank or company offers.
Source of Income: Investment in gold doesn’t generate any income. This yellow metal performs depending on the market conditions and some external economic and geopolitical factors. On the other hand, investors can book fixed deposits to generate income. They have the flexibility to choose interest payouts either quarterly, half-yearly, annually or at the end of the deposit term according to their preference.
Liquidity: Gold investments in terms of bullion, ETFs or equity offer a great degree of liquidity. Physical gold on the other hand, if sold in haste may result in loss. In the case of Fixed Deposits, liquidity will depend on what the financial institution offers. Closing an FD before its maturity date may attract a penalty.
Tenure: There is no fixed tenure for investments in gold. One can stay invested in the metal as long as profitable. While in the case of Fixed Deposits, investors can select the tenure for which they want to invest for.
While deciding between both these investment options, one must remember that there is no one shoe to fit all. Investment plans need to be re-constructed according to individual needs, requirements, risk-appetite and financial goals.
Here’s how the Bajaj Finance FD outperforms investments in gold:
Bajaj Finance Limited, the lending and investment arm of Bajaj Finserv is offering FD interest rates of up to 7.35 % for 5 years for cumulative deposits. The rate of interest offered by the company is one of the highest in the market today and returns are guaranteed. The company boast of boasts of zero unclaimed deposits, indicating timely payments to investors making it one of the safest deposits to park money in, whereas the returns on gold is purely based on price appreciation. Besides, gold in the physical form carries a unique cost – for storage and insurance. Trends show that in the current economic scenario gold is performing well, however, there is no guarantee on the performance of the metal.
Senior citizens get up to 0.25% more fixed deposits made with the company. However, in the case of gold, the rate is standard for all buyers and fluctuates frequently depending on various external factors.
Bajaj Finance Fixed Deposits are backed by ratings of FAAA (stable) by CRISIL, and MAAA (stable) by ICRA, assuring investors of the highest safety and security of their investments. There is no assurance on the safety of investments made in gold.
Investors can use the Bajaj Finance FD Calculator to calculate their returns and plan their investments to fulfil their financial goals. Investments in gold cannot be tied to a goal, as the performance of the metal cannot be predicted.
The Bajaj Finance FD comes with a hassle-free digital experience, high-interest rate, default-free and risk-free experience with assured returns making it a top pick for investors looking to park their money to fulfill their financial goals. Additionally, investors can now choose to invest in a Bajaj Finance online FD that enables them to invest from the comfort of their home.