Benefits of invest in equity rather than FD.

1. Higher Potential Returns:

• Equity: Historically, the stock market has provided higher returns compared to fixed deposits. While returns can vary, long-term investors in equities have often seen significant gains.

• FD: Fixed deposits offer a fixed interest rate, usually lower than the potential return of equity, which makes them less likely to beat inflation over the long term.

2. Inflation Hedge:

• Equity: Stocks often outpace inflation, as companies' revenues and profits tend to grow over time, helping to preserve and increase the real value of your investment.

• FD: Fixed deposits may not provide returns that outpace inflation, especially in times of high inflation, reducing the purchasing power of the money invested.

3. Liquidity:

• Equity: Stocks are more liquid than fixed deposits. You can buy and sell shares on the stock market anytime during trading hours, giving you flexibility in accessing your money.

• FD: Fixed deposits have a fixed tenure, and breaking them early often comes with penalties, making them less flexible.

4. Ownership in Companies:

• Equity: When you invest in stocks, you own a portion of the company, and may be entitled to vote in shareholder meetings or receive dividends (though this is not guaranteed).

• FD: Fixed deposit investors don’t own any part of the financial institution, so they don’t benefit from corporate growth or success beyond interest income.

5. Tax Benefits (Under Specific Conditions):

• Equity: Long-term capital gains (LTCG) from equity investments (after a holding period of 1 year) are taxed at a lower rate (usually 10% for gains above ₹1 lakh in India, for example).

• FD: The interest earned on fixed deposits is taxable as per your income tax slab, which could be higher than the tax on capital gains from stocks.

6. Dividend Income:

• Equity: Many companies distribute a portion of their profits as dividends to shareholders. These can offer a steady income stream, and sometimes, even outperformance in terms of total returns.

• FD: Interest from FDs is paid regularly but is fixed and can be less attractive compared to the potential for increasing income from dividends.

7. Capital Appreciation:

• Equity: Over time, stocks can appreciate in value, increasing the overall worth of your investment, especially if you invest in growing companies.

• FD: The value of your FD doesn't increase beyond the fixed interest rate, meaning the growth of your wealth is limited.

8. Diversification:

• Equity: Equities provide the opportunity to diversify across different sectors and markets, which can lower risk and enhance returns over time.

• FD: Fixed deposits are not as versatile, offering limited diversification.

However, it’s important to note that equities carry higher risk compared to FDs. The stock market can be volatile, and you might experience significant losses, especially in the short term. If you have a low-risk tolerance or are looking for guaranteed returns, FDs may still be a better option for you.

It’s also a good idea to balance both types of investments based on your risk tolerance, investment horizon, and financial goals.