{"id":150,"date":"2021-12-14T09:19:17","date_gmt":"2021-12-14T09:19:17","guid":{"rendered":"http:\/\/localhost\/advisor\/?p=150"},"modified":"2022-01-25T12:16:10","modified_gmt":"2022-01-25T12:16:10","slug":"fdvsmf","status":"publish","type":"post","link":"https:\/\/ankamisolutions.co.in\/consortium-test\/fdvsmf\/","title":{"rendered":"Fixed Deposits vs. Debt Mutual Funds"},"content":{"rendered":"

In ancient times, people used to use carts to go from one place to another and took several days to reach their destination. But now, we have Luxury Car, Airplane, Metro, fastest bullet train and so many advanced vehicles for travelling. This is all the results of changes where there must have been chaos at the beginning of use. Now, we are comfortable in all these.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n

The same\u00a0also applies\u00a0to our investment journey where most of us are still stuck with traditional financial instruments like Fixed Deposits, physical Real Estate and\u00a0physical\u00a0Gold. These have become outdated now. Fixed Deposit only provides\u00a0fixed (and to some extent\u00a0guaranteed returns). Apart from this, it has nothing special.\u00a0Returns are usually low, there is no liquidity available and they are tax inefficient. Moreover, TDS and tax are paid every year on the accrued interest due to which overall growth on the invested capital is not as high as it should be. For better compounding, the outflows from the investment should be as little as possible. You will be surprised to know that you are paying\u00a0a\u00a0very high effective tax rate on\u00a0interest earned in FD\u00a0as compared to Debt Mutual Fund. Even more than your tax slab.\u00a0We know that it is unbelievable and difficult\u00a0for you\u00a0to accept it\u00a0but unfortunately, it\u2019s true. Let\u2019s analyze a simple comparison to understand it better.\u00a0\u00a0<\/span>\u00a0<\/span><\/p>\n

For example, you\u00a0invest Rs 1 Crore in Debt\u00a0Mutual Fund and Fixed Deposit at 6% (assumed rate for calculation)\u00a0for 3 years.<\/span>\u00a0<\/span><\/p>\n

\"\"<\/p>\n

As you can\u00a0see from the above data,\u00a0the\u00a0effective tax rate is\u00a035%\u00a0in FD\u00a0which means you are paying\u00a035% of your total earned interest. It is very high. Whereas it is very less in the case of Debt funds\u00a0i.e.,\u00a0only 8%. You cannot imagine how much you are losing\u00a0just\u00a0by\u00a0investing in FDs.\u00a0The total difference between interest earned on FD and capital gain on Debt\u00a0Mutual Fund\u00a0is around Rs\u00a05 Lakhs\u00a0if\u00a06% is taken in both scenarios.\u00a0<\/span>\u00a0<\/span><\/p>\n

Debt funds are very tax-efficient and very flexible to invest in.\u00a0Returns delivered by debt is also better than FD if invested for more than 3 years.\u00a0Liquidity is also one of the best parts of it\u00a0that allows\u00a0you to invest and redeem\u00a0any amount,\u00a0anytime and anywhere without any\u00a0penalty or exit load.<\/span>\u00a0<\/span><\/p>\n

So, if you are planning to put your hard-earned money into FD for the long term (more than 3 years), think a little bit and analyze all aspects\u00a0before investing.\u00a0<\/span>\u00a0<\/span><\/p>\n

Please\u00a0write to\u00a0us\u00a0<\/span>at\u00a0<\/span>wealth@consortiumsecurities.com<\/span><\/a>\u00a0if you find any difficult to plan your investment\u00a0or need any clarification related to personal finance.\u00a0We will connect with you.<\/span>\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

In ancient times, people used to use carts to go from one place to another and took several days to reach their destination. But now, we..<\/p>\n","protected":false},"author":1,"featured_media":1241,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_seopress_robots_primary_cat":"none","_seopress_titles_title":"","_seopress_titles_desc":"","_seopress_robots_index":"","footnotes":""},"categories":[24],"tags":[36,35,37],"class_list":["post-150","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-debt","tag-debt","tag-fixed-deposits","tag-mutual-funds"],"_links":{"self":[{"href":"https:\/\/ankamisolutions.co.in\/consortium-test\/wp-json\/wp\/v2\/posts\/150","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ankamisolutions.co.in\/consortium-test\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ankamisolutions.co.in\/consortium-test\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ankamisolutions.co.in\/consortium-test\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ankamisolutions.co.in\/consortium-test\/wp-json\/wp\/v2\/comments?post=150"}],"version-history":[{"count":9,"href":"https:\/\/ankamisolutions.co.in\/consortium-test\/wp-json\/wp\/v2\/posts\/150\/revisions"}],"predecessor-version":[{"id":1272,"href":"https:\/\/ankamisolutions.co.in\/consortium-test\/wp-json\/wp\/v2\/posts\/150\/revisions\/1272"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ankamisolutions.co.in\/consortium-test\/wp-json\/wp\/v2\/media\/1241"}],"wp:attachment":[{"href":"https:\/\/ankamisolutions.co.in\/consortium-test\/wp-json\/wp\/v2\/media?parent=150"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ankamisolutions.co.in\/consortium-test\/wp-json\/wp\/v2\/categories?post=150"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ankamisolutions.co.in\/consortium-test\/wp-json\/wp\/v2\/tags?post=150"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}