Juliet D'cruz

Stock Market vs. Fixed Deposit – Which is Better?

Investment is just one word until you figure out there are so many different ways to get through with it. Among those many ways, there are two major ways that you might be thinking of – one of them being a fixed deposit and the other being the stock market. 

Are you pacing back and forth, trying to figure out which is the best option for you? You would not have to do that for very long now that you are here. So, let us get started on deciding which is the option for you, shall we?

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The Stock Market Vs. a Fixed Deposit (How to Know the Best Choice for your Money)

Merely looking at growth funds and IPOs in the share market would not help. At the very same time, just looking at the SBI fixed deposit interest rate would not help. Do you know what you would need? You need a thorough analysis – of the two options and of your financial strategy. 

So, let us take it one step at a time, and the first step would be to understand both of the big choices you have in front of you.

Fixed Deposits

A fixed deposit is when you take a lumpsum amount and invest it for a fixed tenure, for which you will receive interest over the principal that you have invested. 

Stock Market Investing

Now, stock market investing is of many kinds. You could either invest in the share market directly through companies that are public. Or you can choose to invest in mutual funds that are handled by fund managers.

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Now that we know the two of them – it is only right when we understand the characteristics of the two of them.

Major Characteristics of Stock Market Investments and Fixed Deposits

Stock Market Investing

  • Stock market investments can give you higher returns than a fixed deposit.
  • While investing in the stock market, the risks of losing your money are also a by-product. 
  • Stock market investments could either be short, medium, or long term. 
  • Market fluctuations affect the performance of the stock market shares that you have invested in.
  • Stock market investments are not tied to specific investment tenures.

Fixed Deposits

  • Most times, a fixed deposit has comparatively lower returns than a stock market investment (since it will only provide a fixed interest rate on the principal amount).
  • If you invest in a Fixed deposit, you will not be under the radar for any kinds of risks, and you will receive the money you were promised while you were applying (no more, no less).
  • You will have a lock-in period with a fixed deposit, and you cannot withdraw your money before that (a fixed deposit tenure starts from 6 months all the way to 10 years).
  • There will be no market fluctuations on your investments, and irrespective of the external factors – you will always get the same returns.
  • If you want to withdraw your money in terms of emergencies – you can do it by paying off a penalty.

Let us discuss what would be the best option for you, based on your financial goals.

Is Stock Market Investing for You?

Stock market investing is not just for the pros; it can be for anyone with enough determination, so do not fear the risks. Big rewards come with risks, too, because apparently nothing comes easy; we know that by now. Stock market investments are risky – and you can choose to invest in them when you can afford to lose some money in the process of earning more.

But, if your stock market investment is coming from your pocket, out of daily expenses, out of debt – it would not be the best choice to stick to. Since this money comes from a hard place, it could not be something that can be lost easy-peasy. 

On the other hand – if you are investing in the stock market what you have left out of all of your needs, then it is the best choice ever. You would be able to afford the loss (that is – if it ever happens). You can enjoy the benefits of stock market investments.

On an added note – if you do not have a lot of time to invest – say for more than years, you can always invest in the stock market through mutual funds. Mutual funds would give you the option of investing in liquid funds that could be liquidated easily without the wait.

Is an Investment in Fixed Deposits for you?

An FD investment is one of the most traditional investments to date. They are also known to be one of the safest options for anyone. If you cannot afford to lose any money on your investment (and also have a lump sum you are looking to lock up), an FD is one of the best choices you could have.

A fixed deposit lets you be carefree and not have to worry about your money because there will be no fluctuations. Also, your money would be working for you in terms of giving you back interest annually.


Now that you know both of the big options out there for you, you will know what is the best choice for you and your financial goal. Both of the options have their perks – which means it is your job to know which of these perks fit into your financial goal. 


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