Mutual Funds vs. Bank FD
Stop letting fixed deposits lose to taxes and inflation.
Compare 30% slab tax drag and real purchasing power against equity compounding under updated capital gains rules.
₹
₹50,000₹1,00,00,000
Yrs
1 Yrs20 Yrs
Bank FD interest is added to your income and taxed at your top slab rate every single year.
%
5%9%
Compounded quarterly.
%
8%16%
Bank FD Net In-Hand₹13,98,090Tax Paid: ₹2,27,323
Equity MF Net In-Hand₹20,74,971LTCG Tax: ₹1,35,710
Net Wealth Advantage in Equity Mutual Funds
+₹6,76,882
₹10 Lakhs Over 10 Years: Bank FD vs. Equity Mutual Fund
Assuming 30% tax bracket, 7% quarterly FD vs. 12% equity CAGR.
| Metric | Bank Fixed Deposit | Equity Mutual Fund | Net Investor Delta |
|---|---|---|---|
| Gross Maturity Value | ₹20.02 Lakhs | ₹31.06 Lakhs | +₹11.04 Lakhs Higher |
| Tax Deducted | ₹3.12 Lakhs (30% slab) | ₹2.57 Lakhs (12.5% LTCG) | ₹55,000 Less Tax Paid |
| Final Post-Tax In-Hand | ₹16.90 Lakhs | ₹28.49 Lakhs | +₹11.59 Lakhs Extra Wealth |
| Real Return (after 6% inflation) | -0.5% p.a. (Negative) | +5.7% p.a. (Wealth Multiplier) | Beats Inflation |
Frequently Asked Questions & Expert Guidance
While Bank FDs provide nominal principal guarantee (up to DICGC limit of ₹5 Lakhs per bank), they carry severe inflation and tax risk. Over horizons longer than 5 to 7 years, Indian equity mutual funds have historically never delivered negative returns and comfortably beat inflation.