FD vs. Equity Calculator

Safety vs. Growth: The Indian Investor's Dilemma

Fixed Deposits (FDs) have long been the favorite investment choice for Indian households due to guaranteed returns. However, with rising inflation and high tax rates on interest, FDs often fail to create significant real wealth over the long term.

The Impact of Taxation

One of the biggest advantages of Equity (Mutual Funds or Stocks) in India is the favorable tax treatment. As of Budget 2024, Long-Term Capital Gains (LTCG) on equity are taxed at 12.5% only on gains exceeding ₹1.25 Lakh per year. In contrast, FD interest is added to your annual income and taxed at your maximum slab rate (which could be as high as 30%).

Risk Considerations

• FD: Capital protection and guaranteed nominal returns. Low risk, but high "inflation risk."
• Equity: Market-linked returns with the potential for high wealth creation. Higher short-term volatility, but historically superior performance over 5-10 year periods.