{"id":7155,"date":"2021-05-25T11:42:26","date_gmt":"2021-05-25T11:42:26","guid":{"rendered":"https:\/\/kredx.com\/blog\/?p=7155"},"modified":"2023-10-26T05:51:30","modified_gmt":"2023-10-26T05:51:30","slug":"gold-vs-fd-which-investment-option-to-pick","status":"publish","type":"post","link":"https:\/\/www.kredx.com\/blog\/gold-vs-fd-which-investment-option-to-pick\/","title":{"rendered":"Gold vs FD: Which Investment Option to Pick?"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"7155\" class=\"elementor elementor-7155\">\n\t\t\t\t\t\t<section class=\"elementor-section elementor-top-section elementor-element elementor-element-594b4ed1 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-id=\"594b4ed1\" data-element_type=\"section\">\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-7806a901\" data-id=\"7806a901\" data-element_type=\"column\">\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-69ced42f elementor-widget elementor-widget-text-editor\" data-id=\"69ced42f\" data-element_type=\"widget\" data-settings=\"{&quot;ekit_we_effect_on&quot;:&quot;none&quot;}\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t<p><span style=\"font-weight: 400;\">When it comes to low-risk and stable return investment, gold \u2013 in the form of <\/span><b>digital gold, <\/b><span style=\"font-weight: 400;\">gold ETFs, gold bonds \u2013 and Fixed Deposit (FD) as an investment instrument acquires the top position. Both these asset classes have distinctive characteristics that make them unique as well as ideal for risk-averse investors.\u00a0<\/span><\/p><p><span style=\"font-weight: 400;\">Whereas the gold price fluctuates constantly, FD guarantees fixed pre-set returns. Therefore, while determining which investment tool would fetch the maximum benefit in the long term, investors must have comprehensive knowledge.\u00a0<\/span><\/p><p><i><span style=\"font-weight: 400;\">Continue reading to know the intricacies of gold and FD to understand the <a href=\"https:\/\/www.kredx.com\/blog\/5-short-term-investment-options-better-than-fd\/\">best investment option<\/a> among the two.\u00a0<\/span><\/i><\/p><h2><b>Gold\u00a0<\/b><\/h2><p><span style=\"font-weight: 400;\">Gold is a sought-after asset in India and boasts considerable cultural significance. It is also widely popular as an investment choice, thanks to its risk-free nature.<\/span><\/p><p><span style=\"font-weight: 400;\">Experts recommend diversifying a portfolio by dedicating at least 5-15% to gold, i.e. <\/span><b>digital gold<\/b><span style=\"font-weight: 400;\">, gold ETFs, gold bonds, coins and bars, among others. While traditional investment methods like gold bars involve concerns regarding their purity &amp; security, digital gold has emerged as an effective tool due to a 100% online procedure and lack of purity and security issues.<\/span><\/p><p><b>Key Benefits: Digital gold investment <\/b><span style=\"font-weight: 400;\">comes with a host of benefits that make them a profitable investment tool. These include \u2013\u00a0<\/span><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Digital gold offers a higher yield (if sold at the right time).<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It can be liquidated easily.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It optimally hedges against inflation and other external factors.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This form of investment involves transparent pricing and comes in the purest form (99.9% purity).<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It helps to diversify a portfolio.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">As an investment tool, digital gold can be easily tracked.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><b>Digital gold<\/b><span style=\"font-weight: 400;\"> can be used as collateral for online loans.\u00a0<\/span><\/li><\/ul><h2><b>Fixed Deposit<\/b><\/h2><p><span style=\"font-weight: 400;\">FD is a traditional investment option and is considered safer as it generates a fixed return on investment over a prespecified period. <\/span><b>Fixed deposits<\/b><span style=\"font-weight: 400;\"> generate higher returns than a savings account. Individuals can invest in fixed deposit by selecting a suitable amount and tenure and opening an account with a financial institution. This <a href=\"https:\/\/www.kredx.com\/investment\/invoice-discounting\/high-net-worth-individual-in-India\">investment<\/a> instrument does not get affected by market volatility.\u00a0<\/span><\/p><p><b>Key Benefits: <\/b><span style=\"font-weight: 400;\">Below are discussed the inherent benefits of investing in <\/span><b>fixed deposits<\/b><span style=\"font-weight: 400;\">.<\/span><\/p><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">FD offers guaranteed returns.\u00a0<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The returns from FD do not depend on market influences.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">FD comes with flexibility in interest payout, such as cumulative (the interest is accumulated and paid on maturity) and non-cumulative (payouts periodically as chosen by the investor).\u00a0<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Senior citizens can enjoy a higher return on FD.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Investors can avail a loan against Fixed Deposit.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Under section 80C of the Income Tax Act, 1961, FD (with five years lock-in-period) helps investors save tax up to Rs. 1.5 lakh annually.\u00a0<\/span><\/li><\/ul><p><span style=\"font-weight: 400;\">Now that investors have grasped a basic idea about the investment tools \u2013gold and FD \u2013 and their benefits, a comparative analysis will further help them pick the right investment option.\u00a0\u00a0\u00a0<\/span><\/p><div style=\"overflow: scroll;\"><table><tbody><tr><td>\u00a0<\/td><td style=\"width: 190px;\"><span style=\"font-weight: 400;\"> \u00a0 <\/span><b>Parameter<\/b><\/td><td style=\"width: 250px;\"><span style=\"font-weight: 400;\"> \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 <\/span><b>Digital Gold<\/b><\/td><td style=\"width: 280px;\"><span style=\"font-weight: 400;\">\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 <\/span><b>Fixed Deposit<\/b><\/td><\/tr><tr><td><span style=\"font-weight: 400;\">1.<\/span><\/td><td><span style=\"font-weight: 400;\">Flexibility in investing\u00a0<\/span><\/td><td><span style=\"font-weight: 400;\"> \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 Highly flexible\u00a0<\/span><\/td><td><span style=\"font-weight: 400;\"> \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 Flexible<\/span><\/td><\/tr><tr><td><span style=\"font-weight: 400;\">2.<\/span><\/td><td><span style=\"font-weight: 400;\">Rate of Return<\/span><\/td><td><span style=\"font-weight: 400;\">Gold has delivered a 9.8% annualised CAGR return in the last 30 years.\u00a0\u00a0<\/span><\/td><td><span style=\"font-weight: 400;\">FD has yielded average 8% returns over the past 30 years.\u00a0\u00a0<\/span><\/td><\/tr><tr><td><span style=\"font-weight: 400;\">3.<\/span><\/td><td><span style=\"font-weight: 400;\">Liquidity<\/span><\/td><td><span style=\"font-weight: 400;\">Offers easy liquidity.<\/span><\/td><td><span style=\"font-weight: 400;\">Offers limited liquidity and depends on the selected tenure.<\/span><\/td><\/tr><tr><td><span style=\"font-weight: 400;\">4.<\/span><\/td><td><span style=\"font-weight: 400;\">Taxation<\/span><\/td><td><span style=\"font-weight: 400;\">Returns on digital gold is taxable (20% on returns + surcharge + 4% cess) if held for more than 36 months.\u00a0<\/span><\/td><td><span style=\"font-weight: 400;\">Though it is a tax-saving instrument, the interest earned from FD is fully taxable.<\/span><\/td><\/tr><tr><td><span style=\"font-weight: 400;\">5.<\/span><\/td><td><span style=\"font-weight: 400;\">Market Factors<\/span><\/td><td><span style=\"font-weight: 400;\">Depends on the domestic and international political and economic conditions. Thus, its price fluctuates constantly.\u00a0<\/span><\/td><td><span style=\"font-weight: 400;\">Free of external or market factors. Hence, it guarantees a steady income.<\/span><\/td><\/tr><tr><td><span style=\"font-weight: 400;\">6.<\/span><\/td><td><span style=\"font-weight: 400;\">Revenue Generation<\/span><\/td><td><span style=\"font-weight: 400;\">Does not generate monthly revenue. Instead, it generates wealth over time.\u00a0\u00a0\u00a0\u00a0<\/span><\/td><td><span style=\"font-weight: 400;\">Revenue generation depends on the sole discretion of interest payout selection (monthly or upon maturity).\u00a0<\/span><\/td><\/tr><\/tbody><\/table><\/div><h3><b>Things To Consider Before Investing In Gold or FD<\/b><\/h3><ul><li style=\"font-weight: 400;\" aria-level=\"1\"><b>Know Your Risk Appetite: <\/b><span style=\"font-weight: 400;\">Low-risk investment offers low returns and vice versa. Both digital gold and FD are a low-risk investment. However, short-term digital gold investment often gets affected by external factors but always maintains its value in the long run. On the other hand, FD offers stable income depending on the tenure chosen. Therefore, investors must identify their risk appetite and choose accordingly.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><b>Investment Goal: <\/b><span style=\"font-weight: 400;\">Investors should have a clear investment objective to avoid making abrupt decisions.\u00a0<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><b>Term Of Investment: Digital gold<\/b><span style=\"font-weight: 400;\"> comes with a tenure of 5 years but is flexible. At the same time, the tenure of FD can be between 7 days and 10 years. Digital gold investors can sell the asset any time after their purchase. On the other hand, individuals can withdraw cash before maturity from an FD account. However, they have to bear a penalty charge.<\/span><\/li><li style=\"font-weight: 400;\" aria-level=\"1\"><b>Cost Of Investment: <\/b><span style=\"font-weight: 400;\">Before investing in digital gold (only have to pay delivery charges if anyone wishes to get physical gold) or FD (penalty charges for premature withdrawal), investors must know the key costs involved in both cases.<\/span><\/li><li aria-level=\"1\"><b>Volatility &amp; Returns: <span style=\"font-weight: 400;\">Investors must consider these two factors. Though digital gold is more volatile than FD, it guarantees high returns in stable market situations. FD offers steady income in any economic or political situation.\u00a0\u00a0\u00a0<\/span><\/b><\/li><\/ul><h3><b>Bottom Line<\/b><\/h3><p><b>Digital gold<\/b><span style=\"font-weight: 400;\"> and Fixed Deposit both qualify as low-risk investment tools. While digital gold ensures high return at the expense of market volatility, FD guarantees low but steady returns and does not get affected by market factors. Hence, investors must select an <a href=\"https:\/\/www.kredx.com\/investment\/invoice-discounting\/short-term-investment\">investment option<\/a> as per their suitability, profitability and also on the basis of the current market scenario. <\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>When it comes to low-risk and stable return investment, gold \u2013 in the form of digital gold, gold ETFs, gold bonds \u2013 and Fixed Deposit (FD) as an investment instrument acquires the top position. Both these asset classes have distinctive characteristics that make them unique as well as ideal for risk-averse investors.\u00a0 Whereas the gold [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":7156,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[150],"tags":[98,866,867,868,681,869,870,871,97],"class_list":["post-7155","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-gold-investment","tag-bonds","tag-buy-digital-gold","tag-digital-gold-investment","tag-digital-gold-rate-today","tag-gold","tag-gold-vs-fd","tag-gold-vs-fixed-deposit","tag-pms","tag-short-term-investment"],"_links":{"self":[{"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/posts\/7155","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/comments?post=7155"}],"version-history":[{"count":11,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/posts\/7155\/revisions"}],"predecessor-version":[{"id":14979,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/posts\/7155\/revisions\/14979"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/media\/7156"}],"wp:attachment":[{"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/media?parent=7155"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/categories?post=7155"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.kredx.com\/blog\/wp-json\/wp\/v2\/tags?post=7155"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}