Mutual Funds V/s Other Investment Instruments
Even Till now people’s risk appetite are still low. Given an opportunity with market depended Mutual Fund financial product are still seen as a high risk product in comparison to products like fixed deposits (FDs), Public Provident Fund (PPF) or gold.
The later are known for capital saving and stable returns. However, mutual funds are a good alternative for short and long term and advised to enjoy a well calculated positive returns.
Mutual Funds Vs Fixed Deposits
| Mutual Funds |
Fixed Deposits |
| Investing your money in various mutual funds |
Saving your capital |
| Similar returns |
Good returns |
| Returns may vary but it helps beat the inflation |
Constant returns |
| Highly liquid: Exit at any point in time is allowed. |
Less liquid: Exit at any point in time in not allowed. |
Mutual funds vs Public Provident Fund
Public provident fund(PPF) is a great way to save your tax. ELSS(Equity Linked Saving Schemes) too offer on same lines to its customers. It can help you claim a deduction upto Rs. 1.5 lakh under 80C of the Income Tax Act.
| ELSS Mutual Funds |
Public Provident Fund |
| ELSS has a minimum of 3 year locking period |
Minimum of 15 years as locking period |
| Returns are linked to Equity market. Hence, market has a maximum exposure thus achieve higher returns |
It’s a low risk with steady returns |
| Minimum investment: Rs 500 |
Minimum investment you can make is Rs. 500 a year |
| Maximum investment: There are no limit |
Maximum investment upto Rs. 1.5 lakh |
Mutual funds vs Gold
Gold has always been an attraction to the Indian society since ages. Its attraction and demand has never faded since then. Every family buys and invests in Gold in the form of gold jewelry and gold coins. However, gold Exchange Traded Funds (ETFs) are a good substitute to physical gold and easy for online transaction. Also, gold has never been a depreciative asset. If kept in long run it will definitely fetch you good returns.
| Gold ETFs |
Gold |
| Gold ETFs are totally transparent when it comes to pricing and its transaction. |
Not uniform in nature. The price changes from Jeweller to Jeweller. |
| Brokerage charges (0.5%) and expense ratio (1%) are way much lower than gold making charges. |
Additional making charges (20-30%) is a considerable charges. |
| No safety concern issues as they are in digital form(Demat Account). |
Safety Concerns: There might be a chance of theft of physical gold. |
| Easy to sell off gold ETFs when required. |
Tough to liquidate the physical gold for cash in short time. |