ELSS vs FD What Works Best For You
2022-07-07T16:56:42.000+05:30
2026-03-17T00:00:00.000Z
Shriram Finance
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ELSS vs FD What Works Best For You

A Fixed Deposit (FD) is an investment option where people can deposit a certain amount for a fixed term and get back the amount with interest upon maturity. An Equity Linked Savings Scheme (ELSS) is an equity mutual fund category that invests primarily in equities and equity-related instruments. Returns depend on market performance and fund management.

Choosing where to invest can sometimes be challenging. Different investment options offer varying levels of risk, tenure flexibility, and return potential. While some market-linked instruments may offer variable returns, fixed deposits provide returns that are determined at the time of booking for the selected tenure.

This article explains the key features of ELSS funds and fixed deposits to help investors understand their differences.

What is an ELSS Fund?

Amongst all mutual fund categories, ELSS is a fund covered under the Section 80C tax deductions. It is a diversified equity mutual fund that offers tax deductions.

ELSS is a category of diversified equity mutual funds that primarily invest in equity markets.

Since ELSS funds are market-linked investments, the returns depend on the performance of the underlying equity portfolio.

ELSS investments also involve a mandatory lock-in period of three years, which is shorter compared to several other long-term investment instruments. Because ELSS funds invest in equities, their value may fluctuate based on market conditions.

Key Features of an ELSS Fund:

Key Features of an FD:

Will an FD or an ELSS be best for you?

Parameter
ELSS
FD
Returns
Linked to equity market performance
Determined at the time of booking
Tenure
Minimum lock-in period of three years
Tenure varies depending on the deposit scheme you choose
Lock-in Period
Withdrawal permitted after lock-in period
Premature withdrawal may be permitted subject to terms
Risk
Market-linked and may fluctuate
Generally considered a relatively low-risk investment option

Which Option May Suit You?

ELSS funds are market-linked investments where returns depend on the performance of the equity portfolio. Fixed deposits offer returns that are predetermined at the time of deposit for the selected tenure. It is not only easy to start a Shriram Unnati Fixed Deposit but you can also get features like auto-renewal, flexible tenure and good customer support.

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