Mutual Fund vs FD: Larger Public Sector Undertaking (PSU) banks have been decreasing their bank deposit rates as they have adopted the Repo Rate Linked System, where the bank deposit is linked to the Reserve Bank of India's (RBI's) Repo Rate. Since, the RBI has been lowering Repo rate, these PSU Banks are also lowering their bank deposit rates. State Bank of India (SBI) has decreased its Bank FD interest rate to 2.7 per cent whereas PNB customers would get mere 3 per cent bank deposit returns on deposits up to Rs 50 lakh. Similarly, HDFC Bank is giving 3 per cent returns on bank deposits up to Rs 50 lakh while for deposits above Rs 50 lakh, the private lender is giving 3.5 per cent annual returns. ICICI Bank deposits too is yielding 3 to 3.5 per cent on all kinds of bank deposits. So, it becomes important for the senior citizens and those investors who have low risk appetite to find other investment tools that yield more than bank FD without increasing the risk factor.

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Speaking on the alternative investment tool that will keep the risk factor at par with bank deposits but increase returns by 3 to 5 per cent; SEBI registered tax and investment expert Jitendra solanki said, "Debt mutual funds can be a better option for those who have time-horizon of more than 3 years. If the time horizon is 3-5 years, the average difference between the bank deposit and the debt fund will be around 1.5 to 2 per cent because when the time-horizon increases, taxes in bank deposits go up while taxes in the mutual funds start going down."

Differentiating upon mutual fund vs fixed deposits Solanki said that increasing the time horizon helps debt fund investors to garner indexation benefits where you get interest on interest that increases the net yield on one's investment. He advised bank depositors to shift from bank deposits to debt mutual funds if the time horizon is more than 3 years.

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Speaking on the mutual funds vs FD another SEBI registered tax and investment expert Manikaran Singhal said, "Today, none of the investment is free from risk. Even bank deposits are safe till your investment is up to Rs 5 lakh. So, my advice for the bank depositors planning to shift from bank deposits to mutual funds is to get some equity exposure and invest in Balance Advantage Funds and Dynamic Asset Allocation Funds that yields to the tune of 8 per cent in 5 or more than 5 year time-horizon.