Fixed Deposit vs ELSS: A Risk Evaluation Fixed deposit vs ELSS: A risk evaluation | Page 2

Which option carries more risk?
– Tax-free FDs are low-risk options
!
– FDs pay out guaranteed returns at the end of the lock-in
period
– An ELSS carries risk as it gets affected by stock market
movements
– In a downturn, an ELSS may even have negative returns
Difference in returns
– FDs have a fixed rate of interest
– The interest rate on FDs may start from around 6.5%
– Senior citizens earn a higher rate of return on FDs
– The returns on an ELSS are dependent on equity market
performance
Which option is better for
financial planning?
– The guaranteed returns make FDs better for long-term
financial planning
– Use an ELSS to grow your capital over the long term if you
can take risk
Summary
– FDs are preferable when you have a specific financial goal in mind
– You must hold on to your ELSS investment for longer for the money
to grow
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