Do you own Yes Bank shares? What if you had invested Rs 1 lakh in a Yes Bank FD versus Yes Bank shares? (2024)

Yes Bank Outperformed HDFC Bank in terms of stock returns over the past year, but did it outperform Yes Bank's FD? Find out complete details inside.

Young investors these days tend to prefer investing in things like stocks, mutual funds, or even commodities like gold and silver over putting their money into fixed deposits. However, the generation above them still likes fixed deposits because they see them as a safe way to keep their money. They think stocks are riskier, while fixed deposits give them a sense of security.

Neither side is completely right or wrong. It all depends on how old you are and how much risk you're comfortable with. Having fixed deposits as part of your investment plan and putting some money into them isn't a bad idea.

When you invest in stocks, you need to know a lot about the economy, different industries, and specific companies, as well as how those companies are doing compared to their competitors. Picking the right company can make you a lot of money, but if you choose the wrong one, you could end up losing money if you're not careful.

In this article, we're going to look at what would have happened if someone had invested Rs 1 lakh in both shares of Yes Bank and in a Yes Bank fixed deposit 5 years ago, to compare how much money you would have made.

Returns Comparison (Yes Bank outperformed HDFC Bank)

Yes Bank, being the most discussed private bank in India, especially among retailers, after its downturn, trapped almost every second retailer into it. Even some experienced investors also got trapped. As per market capitalization, it is in the thirteenth position, boasting a market capitalization of Rs 75,198 crore. Currently, shares are trading at around Rs 23.99 per share on the BSE.

Over the past year, the shares of this Large-Cap bank have delivered an impressive return of around 44.67 per cent, while the largest private bank, HDFC Bank, has delivered a negative return of 2.73 per cent, despite its sound fundamentals and goodwill in the market. Additionally, during the same period, the Sensex delivered a return of 22.44 per cent.

Turning attention toward stocks versus fixed deposits, if you had invested Rs 1 lakh in Yes Bank shares on the same day five years ago, you would have experienced a negative return of around 82.33 per cent. This means that the investment of Rs 1 lakh would have dropped to around Rs 17,670 only, resulting in a massive loss of Rs 82,330 on the same amount of investment.

On the other hand, Fixed Deposits or FDs serve as long-term investment tools that help investors save money over extended periods. Investors can choose a fixed tenure for the deposit to remain with the bank. Assuming the same amount of investment in the FD 5 years ago with monthly compounding, it would accumulate to Rs 1,48,595 at an annual interest rate of 8 per cent, which is way better than the returns generated by the shares of Yes Bank during the same period. This is achieved without taking much risk, as equity is considered a risky asset with the potential of losing the invested capital.

Choosing the right stock and proper diversification is very important when investing money into any securities, whether Small-Cap, Mid-Cap, or large-cap stocks, regardless of the sector or industry it belongs to. Stocks can deliver multibagger returns, while FDs are known for liquidity and stable returns.

FD is Best For these Investors:

• Conservative Investors: Investors who are risk-averse and prioritize the preservation of their capital often prefer FDs due to the guaranteed returns and low risk of loss.
• Ideal funds: FDs are suitable for individuals having short-term savings goals and needing a secure place to park their funds for a specific period, such as saving for a down payment on a house or a vacation.
• Retirees: Retirees who rely on a fixed income stream for their living expenses often prefer FDs as they provide a steady source of interest income without the volatility associated with other investments like stocks.
• Emergency Fund Builders: FDs provide an ideal option for building an emergency fund as they offer liquidity and stability. Investors can access their funds quickly in case of unexpected expenses or emergencies.
• Investors with Low-Risk Tolerance: Individuals with low-risk tolerance or those who cannot afford a significant investment risk may opt for FDs as a safe and reliable investment option.
• Individuals Seeking Predictable Returns: Investors who prioritize predictable returns and prefer to know exactly how much they will earn on their investment may find FDs appealing, as the interest rates are fixed for the duration of the deposit.

Disclaimer: The article is for informational purposes only and not investment advice.

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