FD vs mutual fund, the honest answer
A bank fixed deposit pays a contractual interest rate, with principal insured up to ₹5 lakh by DICGC. A mutual fund returns whatever the underlying basket earns, no guarantee. For money you need within 1 to 2 years, an FD wins. For money you do not need for 7+ years, equity mutual funds historically win, with much higher volatility along the way. The choice is not 'safe vs risky'. It is 'volatile vs eroded by inflation'.
₹10 lakh in an FD at 7% over 20 years grows to ~₹38.7 lakh before tax. Net of 30% tax on interest, real return after 6% inflation is roughly zero. The same ₹10 lakh in a Nifty 50 index fund at 11% (long-run) grows to ~₹80.6 lakh, with LTCG taxed at 12.5% above ₹1.25 lakh. The post-tax, post-inflation gap is severe.
Putting your emergency fund in equity mutual funds for the higher return. The whole point of an emergency fund is being able to withdraw it on a Tuesday at 11am, not after a 30% drawdown.
A 60-second lesson on this, with a worked drill, lives inside the Finlo app. Free, forever, on the basics.