Bank FDs Positives Capital safety Up to Rs.1 lac per account under Deposit Insurance and Credit Guarantee Corporation of India Returns Guaranteed Different maturity buckets for different investment horizons Bank FDs Nagatives Poor Liquidity Normally, premature withdrawal attracts penal interest Tax-inefficient Returns hardly keep pace with inflation For illustration purposes only. Renewal required Dont renew, and you lose interest Investor Tax Slab 30%20% Pre-tax returns 6.5%6.5% Returns after taxes 4.55%5.2% Current inflation rate 7%7% Tax-efficient returns Bank FDs Mutual Fund Investors tax bracket 30%20% Growth Plan Dividend Plan Pre-tax return 8%8%8%8% Post-tax return 5.6%6.4%7.2%6.22% Inflation7%7%7%7% For illustrative purposes only. Please note that the actual returns may vary. Under the growth plan, long term capital gains 10% (without surcharge) has been considered assuming a one year plus horizon. Under the dividend plan, it is assumed that the entire gains are distributed. BANK FIXED DEPOSIT V/S MUTUAL FUND EQUITY SCHEME Growth of Rs. 1 Lac invested for 3 years MF Out Performance Fr. I. Blue chip FundFD Date Bonus/Div adjusted NAV Date after 3 year Bonus/Div adjusted NAV Rate of Returns Value After 3 Years Rate of Returns Value Aft 3 Years 5-Mar Mar % 1,86, % 1,34,923 51,880 9-Jun Jun % 1,64, % 1,34,010 30, Feb Feb % 80, % 1,33,100 (52,148) 4-Apr Apr % 91, % 1,31,293 (40,228) 2-Aug Aug % 1,38, % 1,33,100 5, Sep Sep % 1,43, % 1,33,100 10,779 1-Jan Jan % 2,33, % 1,33,100 1,00,606 5-Mar Mar % 2,45, % 1,31,293 1,13,851 6-Aug Aug % 2,61, % 1,29,503 1,31, Sep Sep % 2,82, % 1,27,729 1,54, Dec Dec % 3,02, % 1,26,848 1,75,176 1-Apr Mar % 2,70, % 1,25,971 1,44, Jul Jul % 3,39, % 1,25,971 2,13,536 1-Nov Oct % 3,73, % 1,22,504 2,50, Nov Nov % 3,95, % 1,20,795 2,74, Jan Jan % 3,99, % 1,19,946 2,79,143 5-May May % 5,23, % 1,19,102 4,04, Nov Nov % 2,93, % 1,17,424 1,75,702 1-Jan Dec % 2,52, % 1,16,591 1,36,029 9-Aug Aug % 2,93, % 1,16,591 1,76, Nov Nov % 3,03, % 1,18,093 1,85,770 9-Jan Jan % 1,07, % 1,19,946 (12,002) 22-Mar Mar % 86, % 1,20,795 (34,150) 2-May Apr % 97, % 1,20,795 (23,693) 18-Aug Aug % 1,42, % 1,22,504 19, Dec Dec % 1,44, % 1,25,098 18, Jan Jan % 1,42, % 1,26,848 16,042 9-Aug Aug % 1,38, % 1,27,729 11,131 7-Nov Nov % 1,30, % 1,27,729 2, Dec Dec % 1,21, % 1,27,729 (5,923) 4-Jan Jan % 1,17, % 1,27,729 (10,628) 2-Jun Jun % 1,42, % 1,28,969 13, Jun Jun % 1,72, % 1,29,503 43, Aug Aug % 1,41, % 1,32,195 9,740 1-Oct Sep % 1,53, % 1,32,195 21,510 1-Dec Dec % 2,13, % 1,30,396 82,750 1-Jan Dec % 1,82, % 1,27,729 54,737 9-Mar Mar % 2,39, % 1,27,729 1,11, Apr Apr % 1,88, % 1,25,971 62,924 4-May May % 1,67, % 1,25,098 41, May May % 1,34, % 1,24,230 10, Jun Jun % 1,32, % 1,23,365 8, Jul Jul % 1,27, % 1,23,365 4, Sep Sep % 1,28, % 1,23,365 5,613 5-Oct Oct % 1,31, % 1,22,504 8,662 9-Nov Nov % 1,28, % 1,20,795 8, Aug % 1-Oct % 7-Dec % 3-Jan % 14-Feb % 12-May % 11-Jul % 12-Aug % Overall gain in MF compare to FD 33,94,804 All Observations: A) In the above Observation, it is clear that even FD is volatile. Ranging between 10.5% to 5.25% in last 13 years. Ranging between 10.5% to 5.25% in last 13 years. B) Total 46 case under observation. C) 4 time Negative Performance by MF. D) 3 time Under Performance (Compare to FD) by MF. E) 12 time Moderate out performance (Up to Rs. 15,000) by MF. F) 11 time Extra ordinary out performance (Up to Rs. 1,00,000) by MF. G) 16 time Double Extra ordinary out performance (More than Rs. 1,00,000) by MF. H) Overall gain in MF compare to FD is Rs.33,94,804 I) Long term Capital gain Tax benefit also available in Equity MF Scheme. I) Long term Capital gain Tax benefit also available in Equity MF Scheme. Convenience You need to open an account only once Keep adding more to the same account or withdraw whenever you want No renewal worries Your money continues to earn return for you as long as you stay invested Thank You