Fixed Maturity Plans are a kind of mutual fund investment for a fixed term. A person can only invest in an FMO when there is a new fund offering (NFO). In a fixed deposit scheme, you practically lend your money to the bank for interest. If you choose a reputable and profitable bank, the risk of an FD is low. But which of the two should be your choice? Let’s find out which is better for us applying for fixed deposit or maturity plans.
Returns: When you invest in an FMP for over three consecutive years, it is considered a long term. The gains after three years are treated as long-term capital gains. The funds placed in an FMP are further invested in a pool of fixed interest securities. These securities are estimated to mature in line with the maturity of the scheme. Therefore, the return of the FMP is likely to be better than an FD.
Risk: If you are looking for a low-risk investment, a fixed deposit in the bank offering the FD interest rates is the option for you. The fixed deposits with a listed commercial bank or post office is a totally risk-free investment with which investors can earn a fixed interest on the deposits.
Taxation: In the case of fixed deposits, the interest income is combined with the annual income of investors and taxed proportionately to the applicable income tax slab. The taxation on fixed maturity plans is dependent on the maturity period.
These are the most basic features of FD and FMP. Both the investment options have separate benefits. Choose the one which fits your requirement perfectly.
Read More: Open FD Account Online in India
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