For many years, Fixed Deposits have been the most popular investment choice for most
Indians. Ask your parents or grandparents, and they’ll proudly talk about how they locked their
money in a 5 year FD and earned “guaranteed” returns. It’s safe, simple, easy to invest and
predictable, these four things we Indians have always valued when it comes to investing our
hard earned money.
But in the last few years, things have changed. Slowly but surely, more people are moving away
from FD’s and exploring mutual funds. So, what’s causing this drastic shift? Let’s break it down.
FD interest rates are no longer attractive:
FDs used to offer 8–9% returns in the past. Now,
most banks give around 6–7%. If you consider inflation (which is around 6%), your return is
almost zero. In simple terms, your money is growing, but not enough to beat rising inflation. On
the other hand, mutual funds, especially equity mutual funds, have the potential to give 10–12%
returns over the long term. The difference is too big to ignore.
People are becoming more financially aware :
Thanks to YouTube channels, Instagram reels,
and investment platforms like Zerodha, Groww, and Angel One, financial awareness is
spreading fast. Even people from non-finance backgrounds are now learning about things like
SIP(Systematic Investment Plan), Investment In Stocks, Mutual Funds, Compound Interest. This
awareness is encouraging people to invest in mutual funds instead of just sticking to what their
parents did.
Tax benefits are better with Mutual Funds:
FD interest is fully taxable, If you’re in the 30% tax
bracket, a 6% FD return becomes just 4.2% after tax. But equity mutual funds enjoy tax benefits
under long-term capital gains (LTCG) profits up to ₹1 lakh in a year are tax-free, and anything
above that is taxed at just 10%. For people looking to grow wealth over time, this is a huge plus.
Easy to invest from anywhere:
The days are gone when you had to go to the bank, fill out
forms, and wait in line for hours. Now, with just a smartphone and a few taps, you can start a
SIP in a mutual fund. The process is paperless and takes just less than 10 minutes. This
convenience is especially appealing to young working professionals who want everything quick
and digital.
Young Indians are willing to take calculated risks:
Unlike the older generation that preferred
safety, the younger crowd today is okay to take a little risk if it gives them better returns. They
understand that long-term market fluctuations are less risky over longer periods and they know
that mutual funds are not “gambling” ; they are a structured, regulated way to grow wealth.
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Mutual Funds offer goal-based investing:
With FD, you just invest your money and forget about it. But mutual funds allow you to plan for your specific goals, whether it’s saving for a wedding, buying a car, planning a vacation, or retirement. You can choose between equity, debt, or hybrid funds depending on your timeline and risk appetite.
My Conclusion (The journey from safety to growth begins with a single SIP)
I think fixed deposit still have their place specially for senior citizen and for emergency funds,
where capital safety is a priority. But for long term goals and to beat the inflation you have to
invest in mutual funds or stock market. As more Indians get financially literate and comfortable with online investing, this shift from FD’s to mutual funds is the only way to grow our money stronger. It’s not just a trend, it’s a sign of India’s financial evolution.
Ayushic
Swetadash