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Gold vs FD, which is better for you?

gold vs FD

Indians love security and risk-free investment. Fixed deposits and gold are popular investment options among Indian investors, as it considered as risk-free investment. In case of investment, it is important to keep our personal likes and dislikes aside and invests only after considering the various points.



We consider bank deposits and gold as safe investments, but about the returns? While fixed deposits give fixed returns, the rate of gold is not fixed. The interest rate given by the fixed deposits varies from bank to bank and it primarily depends on the repo rate set by the Reserve Bank of India. The duration of the fixed deposits also affects interest rate. Non banking finance companies and corporates give higher interest rates than bank fixed deposits. However, it also comes with higher risk than bank deposits.

 On the other hand, gold is a safe haven instrument. It does not give fixed returns. The price of gold is inversely related to the stock market. The demand for gold goes up during geopolitical tensions or market uncertainties as investors rush to invest in gold. Gold gives lacklustre returns when the equity markets are on an upswing.

Tip 1: Open fixed deposits if you want fixed returns.  

Source of income

An asset is a source of income if it provides regular cash flow. Fixed deposits have interest pay out option which allows investors to receive the interest earned by the fixed deposits regularly. The principal remains intact, and the interest earned is paid out to the depositor. This regular cash flow acts a source of income.

On the other hand, gold does not pay any interest. It is because the returns given by gold are calculated on the increase/ decrease in the gold prices. Hence, you can only get the returns from gold when you sell your gold investments.

Tip 2: Go for fixed deposits, if you want a regular source of income.

Market volatility

Market volatility does not have any impact on fixed deposits. Whether the economy is going through a good or a critical phase, the depositor will receive the same interest rate that was committed to him when he opened the fixed deposit. The interest rate may change because of the various reasons after the fixed deposits mature and are reinvested.

The price of gold increases during volatile times as the demand for the safe haven instrument goes up. Gold is an antidote for market volatility. Gold is inversely related to equities market.

Tip 3: Apply for fixed deposits if you don’t want to worry in the fluctuations in the gold price.    


While many investment avenues will give returns, it is important to check whether the investment will generate real returns. Real return is the returns given by an investment over the current rate of inflation. Simply put, it just means whether the investment can beat inflation. Fixed deposits give a fixed rate of return, but at many times the returns may not be inflation beating.

Even if the fixed deposits give real returns, the taxation of fixed deposits, especially for people in the highest tax bracket, is ineffective. The post-tax returns of fixed deposits may not beat inflation. However, with gold, past performances has shown that gold has given inflation beating returns.

Tip 4: Gold gives inflation beating returns than fixed deposits.  


Liquidity or how quickly the instrument will be available for other purposes is also one of the most important characteristics of an investment avenue. Fixed deposits have a lock in but you if you are in dire need of cash, you can easily break fixed deposits by paying penalties and bank will deposit the amount in your savings account.

Gold is also liquid, as you can sell your gold to the jeweler or take a loan against gold.

Investment tenure

Different investment avenues have different investment tenures or perform well under certain time frames. E.g. equities give higher returns in the long run. Fixed deposits mature anywhere between seven days to 10 years. If you want to lock your investment for a fixed tenure, fixed deposits may be the better investment option. Whereas, gold does not have any specific investment tenure. The major objective of gold in a portfolio is to diversify your portfolio and minimise the risk.

Loan against investment

Unforeseen emergencies and expenses can arise any time. Taking a loan helps us go through emergencies and other life events. Loans can be expensive, but the interest rate reduces considerably if customers provide collateral against the loan. Today, it is extremely easy to get a loan against fixed deposits and gold from a bank or a non-banking financial entity.

Conclusion: Gold and FD are safe investment assets, but they also differ from each other on various grounds. It depends on what are the parameters that are important for you and accordingly select your pick.  

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