"A COMPARISON BETWEEN- FIXED DEPOSIT AND FIXED MATURITY PLANS"

Mostly people confuse between fixed deposit and fixed maturity plan (FMP), but there is a difference between the two. Here is a comparison between them.

Fixed deposit is high-return financial instruments offered by banks, which allows investors to invest there money for fixed tenure and enjoy a higher return than saving account.
 Whereas, Fixed maturity plans are close-ended mutual fund scheme i.e., they have a fixed investment period and are open for a specific time period.


Fixed deposit is a separate financial instrument offered by the bank.
 Whereas fixed maturity plans allow an investor to invest in money market instruments such as commercial paper, certificate of deposits, corporate bonds etc.

Fixed deposit offers a fixed return of 6.5% to 7.5%.  
Whereas fixed maturity plans offer more return of 8% to 8.5%.

Investment period of fixed deposit is up to a fixed maturity date.
 Whereas the investment period of fixed maturity plans is 3 to 7 years.

Tax applicable on a fixed deposit is on the basis of the tax slab which is applicable for income and interest amount.
 Whereas tax on fixed maturity plan is on the basis of the indexation period i.e, if an investor has invested for a period more than three years then a tax of 20% will be applicable and the gain will be considered as Long-term capital gain. Long term capital gain is a tax to be paid on the profit or gain on investment.

Amount in fixed deposit can be withdrawn as and when the need arises.
 Whereas fixed maturity plan have fixed time frame of at least 3 years before which the amount cannot be withdrawn this says that fixed deposit plans are more liquid as compared to fixed maturity plans.

Fixed deposit is more secure than fixed maturity plans as the return is fixed in fixed deposit.
 Whereas fixed maturity plans are more risky as they are affected by market conditions and changes their on.

Fixed deposit is more preferred by investors of the middle class income group who fall in the category of 10% income tax.
 Whereas a fixed maturity plan is more preferred by the upper middle class who are ready to invest in fixed maturity plans for a fixed period of three years with no plan to withdraw it before that time.

So it can be concluded that fixed deposits are more likely to be preferred by investors who have an average income but want an amount in the future for personal use such as child education, purchasing a car or house.
 Whereas fixed maturity plans are more likely to be preferred by investors who want to get long-term capital gain and are not in a mood to withdraw the amount before its maturity.

THANK YOU FOR READING TILL END.

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