5 Differences in Mutual Funds and Time Deposits from Various Aspects


In investing, mutual funds and deposit is considered a safe and low-risk option for beginners. Many people think these two instruments are the same, this is because the way it works is at first glance the same. However, it turns out that there are many differences between mutual funds and deposits from various investment aspects.

This difference is also quite a lot of aspects ranging from the type provided, the nature of the investment, the benefits provided. The basic difference between the two is the position of deposits as a bank product. Meanwhile, mutual funds are truly an investment instrument. To be clear, the following are the differences between the two products from various aspects.

1. Initial Capital Aspect

The first difference between these two instruments is based on the initial capital that must be provided. Generally, the initial capital that must be provided to start a savings deposit is quite large. On average, customers can open a time deposit account with a minimum initial deposit of IDR 10,000.00. Although it has provided a large enough capital at the beginning, the benefits of interest are not always high.

Meanwhile, mutual funds can be started with small capital and gradually increased. The average person can start a mutual fund with a capital of only IDR 100,000. The profit is relatively small, but with a long period of time the returns may become larger over time.

2. Aspects of Origin of Profit

The difference between mutual funds and deposits is in the aspect of the origin of the profits. As an investment product, mutual funds get the difference between funds and profits in line with the growth in the value of portfolio assets. The amount of profit obtained is highly dependent on changes in the investment market.

Meanwhile, as a bank product, the origin of the profit from the deposit product is from the profit or return in the form of bank interest. Time deposits tend to stagnate when compared to mutual funds.

3. Aspects of Tax Objects

Now mutual funds have been legalized as non-tax objects by the government. So, for mutual fund owners who have already benefited. No more paying taxes or calculating taxes from mutual fund earnings.

In contrast to mutual funds, deposits are still a taxpayer object. Profits or interest on deposits held will be taxed up to 20%.

4. Aspects of Ease of Liquidity

The disbursement and liquidity of these two products are very different. Mutual funds tend to be easier to liquidate than deposits. Mutual fund owners can withdraw funds at any time provided the average disbursement duration is 7 days.

While deposits can not be withdrawn just like that. There is a period of time in deposit storage. If the deposit funds are disbursed earlier than the time stated in the agreement. So the owner of the deposit is at risk of being subject to fines or penalties.

5. Aspects of Investment Risk

As previously stated, mutual funds and deposits are considered low-risk forms of investment. However, that does not mean there is no risk at all. Mutual fund investment risk is in the change in the value of its net assets or abbreviated as NAV. This, very much depends on market conditions.

As an investment product, mutual funds do not get protection from LPS. However, the course is overseen by the Financial Services Authority. Meanwhile, deposits, for a minimum deposit value of IDR 2 billion, will receive a guarantee from the Deposit Insurance Corporation or LPS.

The risk itself comes from bank interest which can decrease if the benchmark interest rate from the bank also drops. However, with the LPS guarantee, customers can be protected if the bank goes bankrupt.

That’s the difference between mutual funds and deposits based on various aspects. To choose an investment, it is better if it is adjusted to the existing funds. In addition, it must also be adjusted to the risks, needs, and benefits that can be obtained. Study investment products properly before starting.

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