FD vs Lump Sum Investment: Everyone wants to invest to secure their future. There is an investment in which small amounts of money have to be deposited in installments. But what to do when you have a lump sum amount? You will either get it made into FD, or invest it in lump sum investment. Which of these two is better to invest in? Let us know.

How much return can one get in FD?
FD i.e. Fixed Deposit is considered a good option for those who want fixed returns without risk. At present many banks are offering interest ranging from 6.5% to 7.5% on 5 year FD. If Rs 10 lakh is kept in FD for 5 years at 7% annual interest, then the amount on maturity can reach around Rs 14 lakh. That means you can get interest of around Rs 4 lakh. However, you may also have to pay tax on interest.

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How much profit is there in lump sum investment?
If the same Rs 10 lakh is invested in lump sum investment in an equity mutual fund and gets an average annual return of 12%, then the value of the investment can reach around Rs 17.6 lakh in 5 years. That means there can be a profit of around Rs 7.6 lakh. However, returns of mutual funds depend on market fluctuations and there is a possibility of loss.

Keep these things in mind before investing

• Don’t take decisions based only on potential returns.
• Check your financial goals and risk appetite.
• Keep some money reserved for emergencies.
• Before investing in mutual funds, definitely check the records and expenses of the fund.
• If needed, take advice from a financial advisor.

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Which of the two is beneficial?
If you have to choose one of these two, then choose according to your understanding and need. For example, if your goal is to protect your capital and you want fixed returns without risk, then FD can be a better option. At the same time, if your investment time frame is long and you can bear the ups and downs of the market, then lump sum mutual fund investment can give better returns in the long run.