Mutual Funds	Fixed Deposits
Return earned varies with the market conditions.	They earn pre-specified rates and do not change for entire tenure.
In case of redemption within a year, they would be charged exit load maximum of 1%.	In case of premature withdrawals, they have to pay penalty and miss on actual returns.
High inflation-adjusted returns	Low inflation-adjusted returns.
High liquid.	Low liquid till the tenure of deposit ends.
Tax benefit under 80C if invested in ELSS mutual funds.	Tax benefit under 80C for investment in 5 year tax saving FDs.
LTCG Equity MF – Nil Debt MF – 20% indexation. STCG Equity MF – 15% Debt MF – Tax Slab	Tax depends on your current slab rate, irrespective of the tenure of Fixed Deposit.
Debt Mutual funds have more risk. Equity Mutual funds have higher than Debt MF.	FDs have minimal risk.
Mutual Funds have the option of monthly investments known as SIP.	In FD it is only has one time investment option.

            Comparing mutual fund returns with fixed deposit returns

	Fixed Deposits	Debt Mutual Fund	Equity Mutual Fund
Investment Amount	100,000	100,000	100,000
Return (% p.a.)	9.0%	9.0%	9.0%
Holding Period	1 Year	1 Year	1 Year
Fund Value	109,000	109,000	109,000
Inflation	7.5%	7.5%	7.5%
Indexed Investment Amount	-	107,500	-
Taxable Income	9,000	1,500	-
Tax Paid (as applicable)	2,700	300	-
Post Tax Returns	6,300	8,700	9,000
Post Tax Returns (%)	6.3%	8.7%	9.0%

1. The minimum amount of investment depends on AMC but in general it can be around Rs.500
2. These plans allow SIP.
3. You can withdraw only after the lock-in period of 3 years is completed.
4. The return is not fixed and varies with the market situation.
5. Everyone having a taxable income can invest in ELSS to save tax.

1. Investments are eligible for tax benefit under Sec 80C of Indian Income Tax up to Rs. 1,50,000.
2. Long term capital gains from ELSS are exempt from tax.
3. You can withdraw dividends even during the lock-in period which is not subject to tax.
4. NRIs can also invest is ELSS.
5. When compared to other tax savings options such as ULIPs, NSC & NPS, ELSS give higher returns & lock-in period is shorter.

1. More diversified fund has less negative effect of individual stock on NAV.
2. Equity mutual funds might have notional losses in short-medium term but, in long term they will be profitable.
3. They charge exit load maximum of 2.5% of NAV if redeemed/switched-out within a year of allotment.
4. As the NAV keeps fluctuating, SIP would be better investment option when compared to one-time investment in case of  Equity mutual funds.
5. A nominee can be appointed by the investor for mutual fund units.

1. The tax implication on long term capital gains of equity funds is nil, in case of short term gains they would be taxed @ 15% STCG.
2. Equity mutual funds such as ELSS are eligible for tax benefit under sec 80C of Indian Income tax up to Rs.1,50,000.
3. The entry load for mutual funds is nil.
4. Equity mutual funds also have the dividend option which is tax free.
5. Mutual fund units are not subject to Gift Tax.

1. First thing is to get the Know Your Customer (KYC) completed.
2. Select a Mutual Fund scheme.
3. Provide basic investor details.
4. Complete new purchase application form.
5. Confirm purchase.
6. Payment gateway.

• You can select the date of your choice for deducting the SIP amount depending on the Asset Management Company.
• The investor can do SIP through Electronic Clearing System (ECS) in which he sends instruction to the bank to auto allow debit of SIP amount on a certain date of every month.
• When the Mutual Fund NAV is high you get lesser units but when the NAV is low you get more units.

• SIP can be done as low as Rs.500 or Rs.1000, it can be increased or decreased at any point of time.
• The cost of starting a SIP is nil.
• Long term financial goals can be achieved with SIP
• SIP reduces average cost of purchasing financial asset over time.
• There is no fixed tenure for running SIP, but minimum of 6 months before redeeming.
• SIP is less risky when compared  to one time Investments.