Thinking of investing in FD – Pause – read this


If you have funds and planning to park in FD.  Read below.

FD in banks give a return currently around 8.5% to 9% for a one year maturity and you may get 0.25 % to 0.5% in case if it is invested in a senior citizen name.

Assuming you are a tax payer in the 30% bracket, and assuming the int is 9.5% , you still get a return of 6.65% post tax.

Compare this with debt funds.  You can get a double digit return in one year and most importantly the taxation is different if it is more than one year ie one year and one day, you pay only 10% tax as capital gains and hence if you get a return of 10% your tax free return will be 8.9% ie  you get 30% more tax free returns.

These are invested in safe returns and hence safety is not an issue.

One of the members had done this and the investment has grown to 11.4% (annualised) in 90 days

In case you have any doubts, pick up the phone and call me.

Thanks & Regards

v s varadharajan


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