Time Deposit Versus Mutual Fund

Most of us are taught to save money by our parent because that is what they learned from their parent too. When I was a kid my mother always asked me to accompany her in depositing or withdrawing the money from her saving accounts. I learned this very early in my life that I said to myself to save money and deposit it too to the bank and wait for the interest to accumulate. I was not aware that there is what we call inflation and the money is only used by the bank to their advantage. They give 1.5% to 3% interest per annum to the money minus 20% withholding tax of your interest.

Since you want to earn more interest to your money, they will offer you a Time Deposit scheme in which your money will earn higher than the savings account but you can not touch your money for a certain period of time, most likely 5 years. Yes they will lock your money for that period in order for you to earn more interest. Time Deposit will earn 5% to 8% minus the withholding tax which is 20% of your interest. If you do not know where to use your money then this is better than nothing. Investing your money is the best option to earn big but the exchange is risk. The bigger the yield the bigger the risk too.

All investment and businesses are risky but you can minimize this by studying your investment or business. Calculated risk is what we call when you weigh the risk and benefits of investment and business. Stock Market is very risky especially if you have no knowledge about it. Many expert said that you have to leave this to the expert. Have you heard of Mutual Fund? This too is a sort of stock but more safer than stock market but the yield is higher than the time deposit.

Mutual Fund is a group of stocks that are combined together to form a diversified portfolio. This is safer than stock because it is composed of many stocks and of different kind. So if one stock is down and the others are okay then your money in mutual fund is not gravely affected. When you invest in stock and the economy is bad then there is a chance that all your money will loss.

So I will ask you "which is better mutual fund or time deposit"?

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