For many of the Indian investors, fixed deposits have been quite a favorite. The reasons are quite clear as fixed deposits benefit from guaranteed returns to easy liquidity. However, in today’s world, new doors have been opened for investment: Bitcoin investments. In the last few years, they have become quite popular. On 3rd January 2009, Bitcoins were first launched and is restricted to only 21 million units. Then there are mutual funds, which are also another investment tool that can help you secure huge returns. There is an essential need for people to understand all of the investments carefully, especially when they are considering a venture for retirement.
Following is a detailed analysis discussing the ideal investment for retirement based on three necessary factors. These are:
Safety of Investment: Guaranteed earnings, as well as a high level of security, is ensured by the fixed deposit. Therefore, the age of the individual becomes of lesser importance for providing a safe environment for the growth of wealth. Moreover, fixed deposits for senior citizens offer them with higher interest rates. Fixed deposit choices for senior citizens are in abundance and also come with varying add on benefits, which can include the choice between non – cumulative interest payouts or cumulative interest payouts. Banks follow this trend to NBFCs. Bitcoin, however, is priced without any firm fact, i.e., on speculation. Bitcoin is not secured by the Government or any other agency for that matter. The value of Bitcoin depends highly and mostly on market demand and supply.
Moreover, for the time being, the Indian Government has not launched or spoken about any policy regarding Bitcoin. RBI has also instructed its associates not to deal with Bitcoin. Therefore, these facts make Bitcoin a risky option for retirement since safety is the most critical need then. Other than these two options, mutual funds are a slightly risky option, and the risk involved varies from fund to fund depending on the market conditions.
Return or Earnings: When people think about retirement, receiving regular income so that they can bank on it is essential, so people look out for maximum yield with safety. The fixed deposit helps the individual to check all the appropriate boxes. An individual can anytime check and confirm the return that he/she will be earning with the help of a fixed deposit calculator. This online equipment can be beneficial while people plan their retirement. This online tool will help their planning to take place with ease. Unlike fixed deposits, a mutual fund provides returns on the amount invested. However, it depends on the type of fund and tenure of investment. For instance, an equity-based mutual fund of a large-cap company can fetch you around 15-20% return over 3-4 years.
On the other hand, Bitcoin can have fantastic potential, but the question in doubt remains with speculation. When people are making investments for retirement, they prefer to look out for safer options, so that they can make a well-informed decision. They would make the decision where they can predict and expect the long term return. For now, Bitcoin proves to be a very volatile investment functioning in an unregulated cryptocurrency market place.
Long term potential: A fixed deposit provides its customers with transparent and entirely secure long term investment returns. This assured return can be calculated easily by the customers. Generally, people should opt for five years or less to gain returns that can beat inflation. People have the option that they can renew the fixed deposit anytime for the new term if the interest rate is increased and can earn from higher rates of interest on renewal. While talking about Bitcoin, people might have more long term potential since it is established on a block chain technology, which holds a lot of promise.
Some of the experts believe that this can be as strong as the internet revolution was in the ’90s. But, for the Bitcoin to increase its value continually, it requires the correct access to the right circumstances like wide acceptance in the currency markets all over the world. There are many countries such as India which are taking precautions towards this new currency; however, the time to place the future in the hands of cryptocurrency has yet not come. Now when it comes to mutual funds, long term benefits can only be reaped if you are investing in a large-cap company.
As it is quite clear, investments in Bitcoin might bring out the excitement in people, but it comes with considerable risk and an uncertain future in India. Bitcoin does not prove as a one-stop solution. Even while investing in this option, it is necessary to choose safer alternatives such as fixed deposits to balance the portfolio.