Mutual Fund vs FD Calculator
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Quick Summary
- Compare post-tax mutual fund and FD returns side by side, with a break-even point and a clear winner for your amount and tenure. Free calculator.
- For example, ₹5 lakh invested for 5 years, 30% tax slab works out to Equity MF post-tax return meaningfully higher than FD.
- Built for investors weighing post-tax mutual fund returns against fixed deposit interest
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Investment Details
MF uses 10% LTCG (₹1L exempt). FD taxed at slab rate.
Mutual Fund
Fixed Deposit
⚖️ Break-Even Analysis
Adjust sliders to see break-even FD rate
Key Tax Facts
📈 MF LTCG: Gains above ₹1L taxed at 10% (if held >1 year). Gains below ₹1L — zero tax!
🏦 FD Interest: 100% taxable at your income slab rate (TDS deducted at 10% by bank)
⚡ Key insight: At 30% slab, FD needs to give ~14% to match a 12% MF post-tax
How the Mutual Fund vs FD Calculator Works
The calculator compounds your investment amount in an equity mutual fund (taxed as LTCG only on redemption) and in an FD (taxed annually at your income slab) over the same period, then shows the post-tax final value and effective post-tax return for each side by side.
Example Scenarios
| Scenario | Result |
|---|---|
| ₹5 lakh invested for 5 years, 30% tax slab | Equity MF post-tax return meaningfully higher than FD |
| ₹2 lakh invested for 2 years, 20% tax slab | FD may still win for very short holding periods |
| ₹10 lakh invested for 10 years, any slab | MF's LTCG-only taxation compounds a growing advantage |
* Illustrative estimates assuming constant annual returns. Actual results vary with market conditions.
Frequently Asked Questions
Equity mutual funds have historically delivered higher post-tax returns than FDs over long periods (5+ years) because FD interest is fully taxed at your income slab rate every year, while equity fund gains are only taxed on redemption (LTCG above ₹1.25 lakh/year taxed at 12.5%). FDs remain better for short-term goals and capital safety.
The higher your tax slab, the more FD returns get eroded — at the 30% slab, an FD needs to offer roughly 14% pre-tax to match a 12% pre-tax equity mutual fund return after tax, because MF gains are taxed far more favourably than FD interest.
Yes — bank FDs (up to ₹5 lakh per bank, per depositor) are insured by DICGC and offer guaranteed returns with no market risk, while mutual fund returns fluctuate with the market. The trade-off is FDs typically underperform equity mutual funds over long horizons.
Common Mistakes to Avoid
- Ignoring your own tax slab — the MF advantage over FD is far larger at higher slabs (30%) than lower ones.
- Assuming MF returns are guaranteed like FD — equity returns fluctuate and carry real market risk.
- Comparing over too short a holding period, where FD safety can outweigh MF's tax efficiency.
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* Calculations assume constant annual returns. Actual mutual fund returns vary. Past performance is not indicative of future results. FD comparison uses 7% p.a. SIP returns are compounded monthly.
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