Gold vs FD: Gold vs fixed deposits: While both gold and FDs have pros and cons, evaluating them well and investing according to your investment goals and risk appetite is the best way to enjoy optimal returns while taking on minimal risk and Which is a Better Investment Gold vs fixed deposit (FD)
With the onset of the festive season, most people consider making investments to grow their wealth. While there are several asset classes, gold and fixed deposits have remained firm favourites amongst investors in the country. If you too are unsure of which one to invest in between the two, the best approach is to pick the investment that closely matches your objectives.
While both gold and FDs have pros and cons, evaluating them well and investing according to your investment goals and risk appetite is the best way to enjoy optimal returns while taking on minimal risk.
To help you make a smart decision, here’s a look at how the 2 instruments perform on the basis of a few key parameters.
Risk of loss
Though both gold and fixed deposits are considered to be risk-free options, the prices of the former are volatile and subject to fluctuations. This means that owning gold has some amount of risk.
In contrast, an FD is a safer option. While bank FDs are covered by insurance up to a certain amount, schemes offered by NBFCs have credit and stability ratings that help you evaluate the associated risk. For instance, the Bajaj Finance Fixed Deposit enjoys an international rating of ‘-BBB’ by S&P Global, in addition to the highest stability ratings of FAAA and MAAA by CRISIL and ICRA, respectively. This means that you will receive your maturity proceeds on time and hence, your investment is never at risk.
Guaranteed income
As mentioned, gold is subject to some amount of risk, which means that the returns are not 100% guaranteed. On the other hand, fixed deposits are known to offer guaranteed and steady returns as their performance is in no way linked to the market. Therefore, when you invest in a fixed deposit after evaluating the credit ratings, you can be sure of receiving the amount due to you on time. However, the quantum of returns from an FD depends on the interest rate offered by the issuer, so it pays to choose one with care. With Bajaj Finance Fixed Deposit, for instance, you can enjoy attractive FD interest rates and maximise your returns. Based on your profile and chosen tenor, it offers interest rates of up to 8.70%. Take a look at the returns you stand to earn depending on your investor profile.
New customer
| Deposit amount (in Rs.) | Tenor (in yrs.) | Interest rate (in %) |
Interest earning (in Rs.) | Maturity amount (in Rs.) |
| 5,00,000 | 3 | 8.35 | 1,35,999 | 6,35,999 |
Existing customer
| Deposit amount (in Rs.) | Tenor (in yrs.) | Interest rate (in %) |
Interest earning (in Rs.) | Maturity amount (in Rs.) |
| 5,00,000 | 3 | 8.45 | 1,37,762 | 6,37,762 |
Senior citizen
| Deposit amount (in Rs.) | Tenor (in yrs.) | Interest rate (in %) |
Interest earning (in Rs.) | Maturity amount (in Rs.) |
| 5,00,000 | 3 | 8.70 | 1,42,183 | 6,42,183 |
Storage expenses
Physical assets like gold entail storage costs. Whether you are looking to invest in gold coins, bars or biscuits, safeguarding them is crucial as it impacts your ROI. For this purpose, you may store your gold in bank locker rooms, for which you have to pay a fee. When you take stock of the big picture, you’ll find that these charges eat into a portion of your returns. Conversely, a fixed deposit involves zero storage costs, which means your real returns are equal to the returns promised by the issuer.
Lock-in period
Your investment in gold has no lock-in period unless you attach a certain goal to it and would like to abide by the timeline. This means that you are free to liquidate gold in times of need. The only concern here is based on the market price, you may stand to lose some money. In contrast, when you invest in a fixed deposit, your funds are locked for the entire tenor. You can make premature withdrawals, but this comes at a cost.
That said, you can plan for liquidity by laddering your FDs. By choosing varying tenors of 12 to 60 months, you can ensure that you have access to finance at periodic intervals. To make investing in this manner stress-free, Bajaj Finance offers you a multi-deposit facility wherein you can invest in several FDs of different amounts, tenors and payout frequencies through 1 cheque. Simply forecast your returns using the FD calculator and start investing.
Loan against investment
To help you address liquidity needs, lenders offer loans against both investments. This means that you can mobilise funds for immediate, short-term needs by pledging either investment as security. Further, since such loans are secured, the interest rate is relatively low as compared to that of unsecured loans.
In case of a gold loan, the sanction varies based on the value of gold that you pledge. Speaking of a loan against a fixed deposit, the lender offers a sanction equal to 70% to 95% of the value of your FD. In case of Bajaj Finance Fixed Deposit, you can avail a loan of up to Rs.4 lakh.
Now that you know what both investments have to offer, choose one based on your risk appetite and returns expectations. Alternatively, structure your portfolio in such a manner that you enjoy the benefits that both instruments have to offer.
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