Why Mutual Funds, why not FDs or RDs?

Some points like below can give you a quick analysis of why Mutual Funds are better than FDs:

• Real rate of return: Over the long-term, Mutual Funds particularly the equity-oriented ones are an effective in beating the inflation bug. Meaning, they hold the potential to earn a decent rate of return (also known as the inflation-adjusted returns).
• Liquidity: Mutual funds have high liquidity; but, it also depends on conditions such as type of the scheme opted for – whether open-ended / close-ended, lock-in period, exit load, performance of the scheme, etc. Whereas, in case of bank FD liquidity is bound its tenure.
• Tax implication: For mutual funds, the tax status depends on the category of mutual fund – equity or debt.

In case of bank FDs, the interest is taxable as per your tax slab (i.e. as per marginal rate of taxation) irrespective of the tenure of the bank FD. Thus comparatively, investing in mutual funds is more tax efficient than bank FDs.