A few FD alternatives have gained traction in the last few years. Primarily because they allow investors to diversify their portfolio while earning good returns. Diversifying your portfolio is essential because it helps ensure that your investment risk is not too high and you earn returns even in bad economic conditions. 


While fixed deposits are a great way to ensure that you keep your funds secure and enjoy good returns, having an understanding of alternatives to fixed deposit can make you a better and smarter investor. 


To get you started, here is a list of investment instruments that can serve as an alternative to FD offerings. Some of these FD alternatives offer great security and returns, which helps ensure that you do not just grow your wealth but also keep it secure. 


Read on to learn more about these investment avenues to ensure that you choose the best alternative for a fixed deposit.

Alternatives to Fixed Deposits

If you are looking to invest your surplus funds in investment instruments other than fixed deposits, you can consider one of these alternatives to fixed deposits.

1. Debt Mutual Funds

As an investor, diversifying your portfolio by investing in debt mutual funds is one of the best investment options other than FD. It is a form of a mutual fund (MF) that offers investments in instruments that are of a fixed income. These include government bonds, and corporate debt securities and are popularly referred to as fixed-income funds. Investors are attracted to this investment instrument due to its low entry barrier, fund security, and regular returns features. 

2. Liquid Funds

Like the above, these are a form of MFs wherein your money is invested in marketable securities of a high quality. These securities mature within a 91-day time frame. As compared to fixed deposits, these investment instruments do not possess a lock-in period, and thus offer you monetary freedom. 


Liquid funds are a popular alternative for fixed deposit for investors who prefer liquidity and a higher rate of returns. However, you must note that in the case of liquid funds, returns are not guaranteed, as it fluctuates on the basis of market performance. Most investors decide to invest in liquid funds to build an ‘emergency fund’, which can be withdrawn at will.

3. Equity Funds

One of the most popular investment instruments in India, equity funds is one of the better options than FD in India. An equity fund is a mutual fund scheme where your money is invested in various stocks and shares of different companies in the market. In this case, your funds are managed by a fund manager. 


There are two forms of equity funds – passive and active. In the former, your portfolio is curated in a way that it matches the performance of an index and gives you returns. In the latter, your portfolio is created with the intention that it will outperform an index in the long run. 

4. Government Bonds

When it comes to safe investment options other than FD, government bonds are among the most secure forms of investment. As a result, it is a great option for diversification of your portfolio at a lower risk. This also makes it a popular choice for many investors, even though their rate of return is just marginally higher than regular fixed deposits. 


However, keep in mind that these have a longer lock-in time frame and therefore may not be an ideal option if you are looking for liquidity. 

5. Fixed Maturity Plans

Of the many alternatives to fixed deposit, fixed maturity plans refer to mutual funds that invest your money in debt securities. These come with a fixed maturity period, which can vary from months to years. This gives you the option to choose a plan that is best suitable for your current and future needs. 


Although there is not much liquidity when it comes to fixed maturity plans, they offer better returns when compared to conventional fixed deposits and have lower risk than another alternative of FDs.

6. Money Market Fund

This refers to a form of mutual fund – one that invests your money in instruments that are highly liquid and near-term in nature. These may include cash, cash-correspondent securities, and debt-based securities that possess a shorter maturity period. 


The main aim of money market funds is to provide investors with high liquidity coupled with minimal risk. This kind of investment instrument is also commonly referred to as money market mutual funds. 

Final Takeaway

Having considered these Fixed Deposit alternatives, you can now diversify your portfolio but must do so with adequate caution and research. If you are new to the investment market, fixed deposits may be your best bet as they offer adequate security and stable returns against your funds. 


You can find many viable FD options on Bajaj Markets, and all of these are well-rounded options to consider. With the right issuer, you get the benefits of easy liquidity, a good rate of return, the option to take a loan against your FD, and more. 


Additionally, you can also plan your investment easily with the FD calculator to ensure that you optimise your investment in the best way and earn the returns you want. 

That’s not all. As a senior citizen investor, you can enjoy a higher interest rate and earn better returns. To learn more and start your investment journey.


The information provided by BFDL herein above is related to the Non-Partnered Banks/ NBFCs and is just for the purpose of information and under no circumstances the information provided hereinabove is intended to be source of advice or recommending any financial investment advice or endorsement of any sort. 

The information including interest rates with regard to fixed deposit, provided on this website is gathered through publicly available sources over the internet and is considered as accurate and reliable to the best of our knowledge. BFDL disclaims any responsibility or liability regarding inaccuracies, omissions, mistakes etc. as well as offers by the Non-Partnered Banks. The use of information set out is entirely at the User’s own risk and User should exercise due care prior taking of any decision, on the basis of information mentioned hereinabove. You are advised to visit/ contact the respective Banks/ NBFCs to verify the information before making any investment or opening an account. Further, BFDL does not undertake any responsibility or liability to update this information. YOU ARE SOLELY RESPONSIBLE FOR ANY LIABILITY OR DAMAGE YOU INCUR THROUGH ACCESS TO OR USE OF THE SITE OR SUCH INFORMATION OR MATERIALS EXCEPT WHERE THE LAWS AND REGULATIONS OF A PARTICULAR JURISDICTION CONCERNING WARRANTIES CANNOT BE WAIVED. Additionally, display of any trademarks, tradenames, logo and other subject matters of intellectual property owners. Display of such Intellectual Property along with the related product information does not imply BFDL’s partnership with the owner of the Intellectual Property of such products. 

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FAQs on FD Alternatives

What are the best alternatives to a fixed deposit?

Some great alternatives to FD include:

  • Debt Mutual Funds

  • Liquid Funds

  • Equity Funds

  • Corporate Fixed Deposits

  • Fixed Maturity Plans

  • Government Bonds

Which is the safest alternative of FD?

Among the safest alternatives to FDs in India are government bonds and corporate FDs. Both of these instruments offer excellent investment security and returns that are slightly more than conventional fixed deposits.


How to choose the best alternative to FD?

To choose the better option than FD, you will need to assess a few factors. This includes your risk tolerance, investment horizon, and liquidity needs. If you have high risk-tolerance, opt for a market-linked investment option that offers lucrative returns.


However, if you need a liquid avenue, opt for instruments like corporate FDs. These offer returns better than bank FDs and usually have a lower lock-in period, allowing you to access your funds easily.

Is a corporate FD better than an FD offered by banks?

When assessing the returns, corporate FDs are better than bank FDs. This is because the interest rates on corporate fixed deposits are generally higher than those offered on bank FDs.

Where can I invest in the best FD alternatives?

Considering that there are many Fixed Deposit alternatives to choose from, you first need to decide the instrument. Once done, you can then contact a trusted financial institution to get started or use an online service to access the best alternative to FD. For instance, if you want to invest in mutual funds, you can do so easily on Bajaj Markets.  

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