A comparison between the two: ( Bank Fixed deposits and Fixed maturity Plans)
Similarities:
- Investments for a definite period.
- Avialable for various terms.
- Have choices for periodical returns and cumulative returns.
- Suitable for low and moderate risk takers.
Differences:
- FDs are issued by banks and FMPs are issued by mutual funds.
- Return is known and assured in case of FDs at the time of placing the deposits, but not known and assured in case of FMP, even though indicated.
- Default Risk is transferred to Banks in case of Fixed deposits and retained by the investor in case of FMP.
- Return from Fixed deposit is treated as income in Income tax assessments whereas treated as gain on investments in case of FMP.
