Mutual funds have become the most preferred choice for investors compared to Fixed Deposits (FDs) and Recurring Deposits (RDs) in recent years, according to a report. The report highlights a steady rise in mutual fund investments over the past three years, in contrast to FDs and RDs.
With the low returns on FDs and RDs, largely due to inflation, people are increasingly opting for Systematic Investment Plans (SIPs) to maximize their returns. The rise in mutual fund investments is attributed to greater awareness and the flexibility offered by SIPs.
While inflation has eroded the returns from traditional investment options, the Reserve Bank of India’s (RBI) monetary tightening, including repo rate hikes, has led to higher lending rates, further squeezing returns on debt investments.
As a result, investors are turning to mutual funds, which offer diversification, professional management, and the potential for higher returns.
Mutual fund participation rose to 62% in 2024, up from 54% in 2023, driven by improved financial literacy and easy access via digital platforms, according to the latest report, Moneymood 2025, by Bankbazaar.com.
Top Investment Choices
| Instrument | 2022 | 2023 | 2024 |
| Mutual Funds and SIPs | 57% | 54% | 62% |
| Fixed & Recurring Deposits | 54% | 53% | 57% |
| PF & Postal Schemes | 45% | 43% | 41% |
| Stock Market | 45% | 43% | 40% |
| Life Insurance | 46% | 43% | 37% |
| Gold | 33% | 27% | 30% |
| Cryptocurrency | 32% | 23% | 12% |
This shift has led to a decline in interest for traditional options like fixed deposits, postal savings, life insurance products, and direct stock market investments, as mutual funds provide a more transparent and professionally managed alternative. Gold remains part of portfolio diversification but has seen fluctuating interest.
