Why Shouldn’t I Invest in a Fixed Deposit?

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Information about Why Shouldn’t I Invest in a Fixed Deposit?
Finance

Published on February 25, 2014

Author: sachinkarpe9638

Source: slideshare.net

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Why Shouldn’t I Invest in a Fixed Deposit? Sachin Karpe Explains Why shouldn't I invest in a Fixed Deposit? is the most common question asked by the investors. Will you invest in a FD of 10k, if the net return will be 6.3% instead of an overall return of 9%?

Why Shouldn’t I Invest in a Fixed Deposit? Sachin Karpe Explains Why shouldn't I invest in a Fixed Deposit? is the most common question asked by the investors. Will you invest in a FD of 10k, if the net return will be 6.3% instead of an overall return of 9%? Sachin Karpe explains how the fixed deposit calculated. If you have a fixed deposit of Rs. 10,000 with 9% interest rate, pre-tax interest earned during the year would be Rs. 900. Tax on the interest earned at 30% tax rate would be Rs. 270 and net amount earned by the investor would be Rs. 630. This translates into a net return of 6.3% which is much lower than the presumed return. Sachin Karpe also advices to invest in long term fixed income i.e., debt mutual funds. Long-term capital gains on

investments in debt mutual funds are taxed either at 10 per cent flat rate on 20 per cent indexed. Average return of short-term debt funds in the last 3 years is 8.9 per cent. If an individual decides to invest Rs. 10,000 in a short-term debt mutual fund, pre-tax returns earned for one year would be Rs. 890. At a flat 10 per cent tax, Rs. 89 would the tax amount. Net capital gain would be Rs. 801, whereas posttax interest earned would be 8.01 per cent which is more than the interest rate of fixed deposit. Find Sachin Karpe – A Business Consultant @ https://www.facebook.com/sachin.karpe.9638 Follow Sachin Karpe @ https://twitter.com/Karpe_Sachin Websites : http://sachinkarpe.in http://sachinkarpe.org http://sachinkarpe.co.in

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