Written by the Bini team · Last updated: October 2026
An FDR (fixed deposit receipt) pays a fixed interest rate agreed when you deposit. Not every mutual fund is a fair match for it. The apples-to-apples comparison is a lump-sum investment in an income fund because both are one-time investments in low-risk assets.
Which mutual funds can you compare with an FDR?
An FDR gives a fixed return and is a low-risk investment. So you can't compare every mutual fund with it. A growth fund holds mostly shares and its risk is nothing like an FDR's. The fair comparison is narrower:
- Income funds: They invest in low-risk securities such as government bonds and bills just like the assets behind an FDR.
- Lump sum: An FDR is a one-time deposit and a lump sum is a one-time investment.
The rest of this guide compares an FDR with a lump-sum investment in an income fund.
What they have in common
Neither is zero risk. Both are low risk. Many people think an FDR is zero risk but it is only as safe as the bank. If the bank goes bankrupt you may not get your money back.
There is a red flag that many people miss. When someone sees a higher FDR rate they think it is a good deal but it is often the biggest warning sign. A bank usually offers a higher rate because it has a liquidity crisis and needs your money urgently.
Side-by-side comparison
| FDR | Income fund (lump sum) | |
|---|---|---|
| Return | Fixed rate agreed at the start | Variable but higher than an FDR |
| Risk to your capital | As safe as the bank | Low |
| Predictability | High | High |
| Growth potential | None. The return is fixed | Higher because bond prices can rise |
| Access to money | Early withdrawal means a lower interest rate | Withdraw any time. An exit load may apply depending on the fund |
| Partial withdrawal | Not available | Available |
| Tax rebate | None | Yes. Up to ৳ 7,50,000 every fiscal year |
| Managed by | Bank | AMC |
| Regulator | Bangladesh Bank | BSEC |
Why an income fund can return more than an FDR
When you open an FDR you are lending your money to the bank. The bank can then do one of two things. It can lend the money to a person or an institution or it can invest it and that is mainly in government bonds.
The return on those government bonds has to be higher than the interest the bank pays you. An income fund invests your money directly in the same kind of bonds with no bank in the middle. That is why its return should be higher than an FDR. It is still not guaranteed.
Tax rebate
An FDR gives no tax rebate and its interest is usually taxed at source by the bank. Mutual funds work differently: You can invest up to ৳ 75,00,000 and claim a tax rebate of up to ৳ 7,50,000 every fiscal year. Rates and limits are updated according to the latest guidance from the National Board of Revenue (NBR) (opens in a new tab). You can work out your own rebate with the Bini tax calculator.
The inflation question
A fixed return feels safe but prices keep rising. If your FDR rate is lower than inflation, your money can buy less each year even as the balance grows. Mutual funds that invest in growth assets have the potential to beat inflation over long periods. They also have the potential to fall short, especially over short periods.
Do you have to choose?
No. A lump sum in an income fund is better than an FDR. Funds with no exit load or a low one are a better option than FDRs.
Say a fund charges a 1% exit load if you sell within 30 or 90 days. That works like an FDR for 3 months: stay for the period and you pay nothing. Unlike an FDR you can still take your money out earlier if you must.
So go for a lump sum in an income fund instead of an FDR.
Frequently asked questions
Is a mutual fund better than an FDR?
For a lump sum an income fund is. Its return is higher than an FDR and partial withdrawal is also available. You also get a tax rebate of up to ৳ 7,50,000 every fiscal year. An FDR gives a fixed return and no tax rebate and it is only as safe as the bank.
Are mutual funds risky compared with FDRs?
Income funds are low risk and so are FDRs. Growth and Shariah funds are high risk so they are not comparable with an FDR.
Is an FDR zero risk?
No. An FDR is only as safe as the bank. If the bank goes bankrupt you may not get your money back.
Why is a high FDR rate a red flag?
A bank often offers a higher rate because it has a liquidity crisis and needs your money urgently.
Can mutual funds give higher returns than FDRs?
Yes. Income funds invest directly in government bonds whose returns are higher than the interest banks pay on FDRs. The return is variable so it is not fixed in advance.
Does an FDR give a tax rebate?
No. An FDR gives no tax rebate. Mutual funds do. You can invest up to ৳ 75,00,000 and claim a rebate of up to ৳ 7,50,000 every fiscal year.
Which is more liquid, an FDR or a mutual fund?
A mutual fund. You can withdraw from an income fund any time and an exit load may apply depending on the fund. An FDR has no partial withdrawal and closing it early means a lower interest rate.
Should I choose a mutual fund or an FDR for a lump sum?
An income fund. A fund with a 1% exit load for 30 or 90 days works like a 3-month FDR and it also gives you a tax rebate and partial withdrawal.