Post Office Fixed Deposit Vs Mutual Fund

by Shakti Singh Dulawat on July 22, 2010

In the arena of investment, you will always find different type of business people.  But among these various types, two categories emerge:  the high risk takers and the low risk takers in view of investment returns.

Now, as regards to which type of investment could reward a higher investment return, either the post office FD or the Mutual Fund, here is my practical answer, both of these options are good it only depends on your risk appetite and the expected returns from your investments. If you are a high risk taker and expect higher returns from your investments; then you can go for Mutual Funds. If you are a low risk taker and expect capital safety in any circumstance then go for Post office FDs.

It is interesting to note that, UTI Mutual Fund (UTIMF) is planning a joint venture with the Indian postal department to introduce products meant to be sold through the postal channel.

Moreover, confirming the development, senior fund officials said the plan was still in the planning stage and will be taken up only after its distribution tie-up with the postal department shows some degree of success.

Indeed, the schemes under the joint venture would be largely targeted towards the retired bracket of customers, savings plans for children, retirement plans, schemes targeted at women and so on.

Ashutosh Bishnoi, chief of marketing, UTIMF, said: “We do not mind developing products which are specific to a particular channel of distribution.”

The intention, said officials, is to sell products which would appeal to, and be easily understood by the kind of, people who generally frequent post offices. So the stress would be on savings rather than investments.

Truly, “Once the reach of the postal products swells to a certain size, we would have no problem in utilizing this channel exclusively for any of our other products,” Bishnoi said.

Such schemes, in accordance with the industry norms, would not be assuring any returns at all.

Furthermore, UTIMF, in fact, plans to utilize the postal channel in a wider way than it has been doing so far.

According to UTIMF vice-president, and head of marketing Ratin Lahiri, there are plans to set up a postal finance mart. “In other words, designated post offices will be used as specific point of sales for a whole host of financial products to be launched by the UTIMF.”

It must be noted, under the current arrangement with India Posts, UTIMF is selling four schemes through 50 post offices throughout the country.

These schemes are — UTI Mahila Unit Scheme, Unit Linked Insurance Plan, Children’s Career Balanced Plan, and UTI Retirement Benefit Plan.

This is common question on investor mind for deposit money so the answer is:
Both the options are good it depends on your risk appetite and the expected returns from your investments. If you are a high risk taker and expect higher returns from your investments; then you can go for Mutual Funds. If you are a low risk taker and expect capital safety in any circumstance then go for Post office FDs.

Please read trading tips before investing.

In conclusion, in order to sell the scheme, each of these post offices would have an account manager while personnel in the post offices are being trained to sell the products and explain the products’ attributes to the customers.  Therefore, it doesn’t matter what type of investment scheme you wish to use in your stock endeavors, it’s up to you to decide.  Happy investing!

{ 1 comment… read it below or add one }

Krishnamkk360 January 21, 2012 at 11:16 am

What is the % of Interest of Recurring Deposit for  one year for Rs.50/= or 100/=

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