Mutual Fund V/S

Fixed Deposit VS Mutual Funds

FactorsFixed DepositDebt Mutual Funds
Typical Returns7%8-10%
Tax (Most Important)*As Per Tax SlabDebt Less Than 5% Arbitrage – 0%
Lockin PeriodFixed Term/ Premature With PenaltyNIL
Typical Net Return (Post Taxes & Penalties)5-6%8-10%
Risk FactorLowLow

# Taxation details are as per existing tax laws. The nature of tax will depend based on the individual’s tax

Taxes significantly affect income from FDs

While interest from Bank FDs is always taxed at your maximum rate, Debt funds attract almost nil tax after 3 years and lower tax between 1 and 3 years. Upto 1 year the tax impact for both is similar The illustration here -an investment of Rs 1 Lakh each, we’ve assumed in a given year, all 3 investments deliver a return of 9% can help you understand the comparison better.

FactorsFixed DepositDebt Mutual FundEquity Mutual Fund
Investment Amount100,000100,000100,000
Return (% p.a.)9.0%9.0%9.0%
Taxable Income9,0001,500
Tax Paid (as applicable)2,700300
Post Tax Returns6,3008,7009,000
Post Tax Returns (%)6.3%8.7%9.0%
Holding Period1 Year1 Year1 Year
Fund Value109,000109,000109,000
Indexed Investment Amount107,500

Provident Funds VS Mutual Funds

PPF is a long-term savings investment option established by the Govt. of India in 1968. It offers tax benefits on withdrawal as well as on contributions.
Mutual Funds-ELSS (Equity Linked Saving Scheme is similar to PPF in terms of tax implications(both enjoy the benefit of 80C). However, the average returns in ELSS in much higher (3 years returns-14- 16%) when compared with PPF.
Safe Investors can also invest in Debt / Liquid / Short Term Mutual Funds. Debt funds allow indexation benefits (tax is lowered, taking inflation into consideration) if you hold them for a period of 3 years.

FactorsPPFELSSDebt-Short Term Funds
Lockin Period15 years3 YearsNIL
Tax ApplicableNo TaxNo TaxShort term and Long Term Capital gain
tax with indexation benifit


Financial YearInterest Rate(p.a)

Recurring Deposits VS Mutual funds

The interest rates on RDs depend on which category you fall under and your choice between different banks. The current interest rates available from different banks range between 4.5% and 7.90% per annum.

FactorRecurring DepositMutual Funds-Robo Invest
Typical Returns5-7%7-13%
Typical Net Return
(Post Taxes & Penalties)
4.5-5.5% (End Of Term)
3-4% If RD Is ‘Broken’
Penalty/Exit Load1-2%0%
TaxAs Per Tax SlabDebt Less Than 5%
Arbitrage – 0%
Mode Of InvestmentMonthly AutomaticBi-Weekly/ Monthly Automatic
CompoundingQuarterly/ YearlyDaily
Lockin PeriodFixed Term/ Premature With PenaltyNIL
Partial WithdrawalSometimesAlways Allowed

Savings Account VS Mutual Funds

One should keep 2-3 months’ expenses in the savings bank account. Further, 3-6 months of regular expenses should be invested in a liquid mutual fund. Anything more than this in the savings bank is an opportunity cost, loss of interest income, and negative returns; if inflation-adjusted returns are considered.
Dividends are Tax free
long-term capital gains tax – 11.33% (including cess and surcharge) or 22.66% with indexation benefit, whichever is lower

FactorSaving AccountLiquid Mutual Fund
Typical Returns4-6%6-7%
Tax (Most Important)*As Per Tax Slab0% after 3 yrs
Lockin PeriodNILNIL
Entry Load and Exit LoadNILNIL
Typical Net Return
(Post Taxes & Penalties)
Risk FactorLowLow

Mutual Funds VS Real Estate

FactorsMutual FundsReal Estate
Investment amountAs small as Rs 500 MonthlyHuge lump sum, ranging from lakhs to crores.
RedeemInstantPartial/Whole redemption of units as one needs
LiquidityEvery month is calculated on a per sq. ft. basisWhole
Maintenance costZeroThe cost to acquire property approximately include
stamp duty (4%-8%), registration fees (1%), legal fees
(1.5%) and real estate agent’s commission (1-2% + GST)
for buyer.
Cost of BuyingNILThe cost to acquire property approximately include
stamp duty (4%-8%), registration fees (1%), legal fees
(1.5%) and real estate agent’s commission (1-2% + gst)
for buyer.