If you are a conservative investor, then risk-free investments will generally hold a top priority in your portfolio, with fixed deposit (FD) and gold being the most preferable options. However, there are certain points of comparison that you should know before zeroing in on the correct investment instrument as per your needs and situation. To begin with, you should approach the whole selection process with the understanding that gold investments are bound to fluctuate as they are market-linked while fixed deposits provide assurance of a predefined return.

Check out other comparative points between the products to make an informed decision.


An investment in gold may provide the assurance of a reasonable return. However, as the government has taken numerous measures to control gold inflation, the gold rate has considerably fallen. In the past, investment in the metal was a prudent choice as it provided inflation-beating returns. Instead, there is an appreciation in gold prices noticed owing to paper currency devaluation. Thus, returns in gold investments in most cases are now lower.

On the other hand, the applicable rates for fixed deposits when opening the account stay the same until maturity irrespective of any card rate changes during the period. For instance, if you open a fixed deposit of two years tenure at 5% p.a., the interest rate will stay the same until the end of two years. Hence, there is a high level of income certainty in fixed deposits.

Flexibility in choosing the investment tenure

In the case of gold investments, you can invest in gold mutual funds, gold Exchange Traded Funds (ETFs), or gold bullion. The duration of such investments depends upon the kind of investment you select. Fixed deposit investments provide flexible investment tenures. You can choose between 7 days and 10 years based on your financial goal and requirement.


Ease of liquidity in gold has made it a preferred choice among those looking for instant buy-in. As stated, investments in gold can be made in various ways like – gold funds, ETFs, etc. Again, remember as returns in gold are market-linked, though you may be able to sell them quickly in times of emergencies, there is a chance of incurring a loss.

In the case of fixed deposits, liquidity is hugely dependent upon the policies of the respective financial institution. Many banks generally charge up to a 1% penalty in situations of premature withdrawal. Prepayment withdrawal penalty is deducted from the effective interest rate of the FD, which is generally lower than the original booked card rate and card rate of the period for which the deposit has been in force.

Income support

A fixed deposit may act as a source of income. You can easily select the interest frequency you want along with the tenure. Also, it is possible to choose the cumulative option wherein the interest earned on the FD is reinvested to earn better returns.

Gold, on the other hand, cannot generate income. It is only an asset that performs based on the market situations and external conditions. Sure, there is always an option of selling gold in times of need. However, there is always a risk of booking a loss because gold rates always fluctuate.


Gold in India is not just an investment, its accumulation is linked to status, emotion, and, in a few cultures, it is even considered a bearer of an excellent fortune. However, as it is linked to the market, it holds the risk of being affected by market volatility.

Fixed deposit, on the other hand, is often the first port of call for many who are starting their investment journey. Returns on it are assured until maturity irrespective of any changes in the card rate during the tenure. Thus, on the safety and capital protection aspect, fixed deposits perform better than gold investment but on the liquidity and potential of generating higher returns front, gold may perform better than fixed deposits.