61) Unit Trust Bond Fund Vs Fixed Deposit

61) Unit Trust Bond Fund Vs Fixed Deposit

10 Years Performance Graph between Bond Fund vs Fixed Deposit from 13 Apr 2009 to 10 Apr 2019.

Bond Fund:
1) Does not have fixed tenure (eg. 6 months, 12 months, etc)
2) Cash flow is flexible. Can add or withdraw any amount, any time.
3) No penalty for early withdrawal.
4) Interest earned in Bond Fund is not taxable.
5) Net Asset Value change gradually during the whole invested period.
6) Able to switch to other fund types easily.
7) Returns are potentially higher compared to Fixed Deposit.
8) Easy to manage as can have as few as only 1 account for Bond fund. Can have many bond funds for diversification.
9) A Bond fund consists of many bonds with different companies, coupon rates, maturity dates, etc. Bond Fund manager able to trade bonds to capitalize on market conditions. 
10) Returns are not guaranteed or not pre-determined.
11) Have a small Initial Service charge upfront.
12) Similar returns for different periods, depending on market situations. Returns rate not dependent on longer or shorter period.
13) Investments are held under a Trustee, separated from UTMC assets.
14) UTMC's legal/financial problems will not affect Unit Trust investments.



Fixed Deposit:
1) Have fixed tenure. Eg. 6 months, 12 months, 18 months, etc.
2) Have to create new Fixed Deposit account when want to add more money. 
3) Have to fully redeem the full Fixed Deposit account if need to withdraw any amount.
4) Penalty or reduced interest income if need to withdraw.
5) Interest income earned from Fixed Deposit may be taxable.
6) Fixed Deposit is only saved in one bank. Risk of bank closure. Need to save into multiple banks to diversify. More complicated to manage many FD accounts.
7) Returns are low as risk is also low. 
8) Required to have multiple Fixed Deposit accounts for different amounts.
9) Fixed Deposit are passive savings. Returns are pre-determined.
10) No service charge.
11) You get higher FD interest rate for longer tenure. Lower interest for shorter tenure.
12) Deposits are held in the bank, become a part of the bank assets.
13) Deposits (in Malaysia) are protected up to RM250,000 per account, under PIDM*
14) Bank's financial/legal problems may affect the deposits.


Note *: Please refer to www.pidm.gov.my for more info.

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61) Unit Trust Bond Fund Vs Fixed Deposit
http://highlevelrules.blogspot.com/2017/07/unit-trust-bond-fund-vs-fixed-deposit.html