15 Sep 2016

How an FD Can Give Half the Returns of a Liquid Fund

Did you know that a person who invests in an FD for 30 years can end up with half the final value as another person who invests the same money in a liquid fund? Both give the same return. The only difference is that FDs have higher taxes.

Behold:

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If the embed doesn't work, click here. This link also lets you make a copy of the spreadsheet to tweak the assumptions.

Compounding is counterintuitive. A 30.9% tax every year on an FD compounds to a 50% difference in the final value. Don't invest much in an FD.

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