The stock market and fixed deposit are the two most popular financial instruments in the world. But which one is better for investment?
Various financial instruments available in the market help you earn more on your savings and investments. Technology and modernity have made investing in the stock market more popular. Many investors either invest in the stock market or fixed deposits. Depending on your requirement and comfort level with risk, this blog will assist you in selecting which of these is best for you.
Which One Is Best For Investment?
If you have loads of money to invest and grow, you will want to look at the stock market. You can become a stock market investor, but you must decide whether you want to go for the risky stock market or a safer option like a fixed deposit. The following analysis will help you to decide which one is best for you:
Fixed Deposit Vs. The Stock Market- Factor
When choosing between stock and FD to invest in, you must consider a few factors per your need. Continue reading to know more.
Indeed, some of you did not want to put your hard-earned money at risk. If you’d want to put your money in a secure financial vehicle, a fixed deposit is good for you as it is far safer than the stock market. On the other hand, the stock market has a high risk for money.
Return is also an essential factor that you should consider. Most investors need higher returns. Suppose you are one of those; you should invest in the stock as stock gives higher returns than other financial instruments. On the other hand, FD has lower returns than stock.
Last but not least, liquidy is also another factor that you should consider is liquidy. There is a lock-in period for the fixed deposit. Which means you cannot withdraw money before the end. If you withdraw the money within the period, you must pay pre-closure fees and receive a low-interest rate. On the other hand, anyone can sell or buy stock anytime without any extra fee.
Fixed deposits are provided at an interest rate that has been predetermined, allowing you to receive a fixed sum after your investment term. However, you always have the choice of getting your money all at once or in recurring payments like monthly, quarterly, half-yearly, and annually. On the other hand, stock interest rates change depending on several variables.
The stock market is a risky investment, and you might be frightened of losing all your money. Suppose you have a long time horizon and can hold on to your stocks for at least one year, then the stock market can be a great source of wealth creation. On the other hand, you can look at more conservative investment options like fixed deposits, which are lower risk and will give you decent returns.