On the one hand, customers get interest of around 9% in debt mutual funds. While some small finance banks are currently giving interest up to 9.50% to their customers. Let’s know what experts say.
FD vs Debt Fund: If you want to get bumper returns by making a safe investment of your accumulated capital for short or medium term, then this news is for you. Most of the investors remain confused as to which one to choose between Fixed Deposit (FD) and Debt Mutual Funds for this period. On the one hand, customers get interest of around 9% in debt mutual funds. While some small finance banks are currently giving interest up to 9.50% to their customers. According to a report published in ET, let us know what experts say.
What do experts say
According to Naveen Kukreja, co-founder and CEO of paisabazaar.com, currently Small Finance Bank FDs are safer and offer higher interest than debt mutual funds. As per RBI guidelines, now NBFC banks also provide insurance cover up to Rs 5 lakh in case of bank failure like big public sector banks. Debt mutual funds, on the other hand, are market linked products, which are subject to interest rate and credit risk.
What is debt mutual fund
Debt fund is a type of mutual fund category fund where investors’ money is invested in places like bonds, government securities, treasury bills. Debt mutual funds are considered safer than equity funds. However, the lock-in period of money in debt mutual funds is less than that of bank FDs, so you can get higher returns here in the short term.
How much interest is being received in FD
Small finance banks like Unity Small Finance Bank are offering 9% interest on FDs of 1001 days to their general customers while 9.50% interest to their senior citizen customers for the same time period. Similarly, Jana Small Finance Bank, Fincare Small Finance Bank, Suryoday Small Finance Bank and ESAF Small Finance Bank are giving up to 9% interest to their customers for different time periods.
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