A self explanatory table of comparison between investments
( Fixed Deposit/ National Savings Certificate Vs Diversified Mutual Fund)
( Fixed Deposit/ National Savings Certificate Vs Diversified Mutual Fund)
| Amount in Rs | ||
| Investment | F.D./ NSC | Diversified Equity MF |
| Amount | 10000 | 10000 |
| Period | 6 years | 6 years |
| Maturity Value | 15868.74 | 29859.84 |
| Tax on Income/ Capital gains | 1573.68 | 0 |
| Inflation | 4185.19 | 4185.19 |
| Value of Investment after 5 Years | 10109.87 | 25674.65 |
| (post tax post inflation) | ||
| Difference | (15564.78) | |
| Rates | Per annum | |
| Inflation | 6% | |
| Rate of Interest on F.D./NSC | 8% | |
| Rate of Return on MF | 20%*** | (Last five years average 40%) |
| Income Tax rate | 30% | |
***This post was published originally in Dec 2006 ( When the global equities were moving to a peak ). In those times,an average equity mutual fund had annualized returns over 40% for five years ( 2001-2006). In 2013, the average annualized return for equity funds stand at around 5 % (considering the last five year period 2008-13).
So, Please know your facts and risks associated well before investing. Blind extrapolation of the past would lead to great failures.
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