Educating Investors

StockBasket VS Fixed Deposits3 min read

In this blog, we will compare StockBasket VS Fixed Deposits and will discuss which asset class can really work for you to achieve your dreams. We will first have a look at fixed deposits:

Fixed Deposits

A fixed deposit (FD) is a financial instrument provided by Banks or NBFCs which provides investors with a higher rate of interest than a regular savings account, until the given maturity date. The amount deposited can be in the form of Lumpsum amount, there are also recurring fixed deposit schemes, that allow investors to increase the savings on a monthly basis, in this case, the interests are added on a quarterly basis to your savings. Fixed Deposits have fixed interest rate ranging from 6-7%. FDs don’t give you stellar returns but they make sure that you get stable returns over the period of time. 

Let’s have a look at some of the Pros and Cons of fixed deposits:

Pros

  1. Low-Risk investment option: Fixed Deposits are the most risk-free investing options, although the returns are low but are steady.
  2. Low Minimum investment amount: Though the minimum amount varies from bank to bank an investor can start investing from Rs. 1,000 to Rs. 10,000 depending on his investing capacity.
  3. Independent to Market forces: FDs are not dependent on the market forces and generates stable income in a specific amount of time.

Cons

  1. Low Return on Investment: Fixed Deposit gives low returns as compared to the other investment options in the market
  2. Taxation: The interest generated by bank fixed deposits are fully taxable, a 10% TDS is charged if the FD generates an interest of more than Rs.10,000 for the respective year.
  3. Low Inflation Beating Capacity:  In 2018, inflation was 4.86%, this factor when taken into consideration nullifies the growth of wealth for the investors

This was all about Bank Fixed deposits that an investor should know before investing his hard-earned money, we move on to give you an idea about what is StockBasket 

StockBasket

StockBasket is India’s first buy and hold long-term investing platform, it operates under the Samco brand. It has a pool of expert-curated ready-made basket of stocks designed as per the investor’s financial goals like International Vacation, Retirement plans, or saving for one’s child education. Investors have to hold the basket for at least 5 years for wealth creation.

Let’s have a look at some of the Pros and Cons of StockBasket :

Pros

  1. High Returns on Investment: Average return on investment on StockBasket are very high. The CAGR of average StockBasket lies between 15-17% which has the potential to double your investments in just 5 Years
  2. High Inflation Beating Capacity:  As the Compounded annual growth return is very high it can easily beat the inflation and give you some staggering return on investment.
  3. Tax-free Dividends: With StockBasket you get the benefit of dividends which are directly credited to your bank account.
  4. Low Minimum investment amount: StockBasket was made with a purpose that wealth creation should be accessible to all, the min investment in StockBasket starts from Rs. 3,0000.

Cons

  1. Dependent on Market forces: Like other investments in Stocks, StockBasket is also dependent on the market forces, but due to the selection of top companies in the basket, they usually have less impact of the market corrections on them.
  2. Penalty on Early Exit: StockBasket charges twice the exit fee if the investors sell his StockBasket before 5 years, this policy is purposely made to bring discipline in investors to stay invested for at least 5 years for long-term wealth creation

Summary:

“Money is always eager and ready to work for anyone who is ready to employ it.” Idowu Koyenikan

StockBasket VS Fixed Deposits:  We can clearly say that though Fixed deposits are safe bets for investors,  they can hardly help investors to generate wealth over a long term period, instead investors should invest in StockBasket which has a high inflation-beating capacity that will help to achieve their financial goals within the stipulated period of time.

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