What your money actually earns. After tax. After inflation. The real number — not the one your bank quotes you.
In India, a 7% FD delivers approximately −1.04% real return per year for a 30% tax-bracket investor at 6% inflation. After tax and inflation, most fixed-income instruments lose purchasing power — while equity SIPs at 12% CAGR deliver +4.34% real return. This page explains why, with the math.
Each tool answers one decision. Pick the question that sounds most like the one in your head.
A 7% FD becomes 4.9% after tax. At 6% inflation, that's a −1% real return.You're not earning. You're slowly losing.
Most Indians don't have a money problem — they have a clarity problem. Banks quote nominal returns. Mutual fund ads show 12% CAGR without tax or inflation. The result: confident decisions built on incomplete math.
We call this difference between what you're told and what you keep The Real Return Gap. Every tool on this site exists to make that gap visible — for FDs, RDs, mutual funds, PPF, NPS, and every other Indian instrument.
Historical real returns across common Indian investment options after tax and 6% inflation. The bars show how far above or below zero each instrument lands.
3–6 months of expenses. FDs are for capital safety, not growth. Anything beyond emergency needs is losing real value.
15-year horizon? PPF is tax-free at 7.1%. Want equity exposure with tax savings? NPS Tier-1 with 75% equity allocation.
Equity mutual funds via SIP are the only Indian instrument that consistently beats inflation in real terms over long horizons.
Common amounts, durations, and goals — each with the breakdown worked out and a clear verdict. Open any one to read the full reasoning.
Real return is the actual gain on an investment after subtracting taxes and inflation. A 7% Fixed Deposit in the 30% tax bracket has a post-tax return of 4.9%. After 6% inflation, the real return drops to about −1.04% per year — meaning your money loses purchasing power even as the balance grows.
Most Indians focus on the nominal interest rate — the number their bank advertises. But this number is misleading because it does not account for two major deductions: the tax you pay on the interest earned, and the purchasing power lost to inflation.
In contrast, a Systematic Investment Plan (SIP) in an equity mutual fund at 12% CAGR — after 12.5% LTCG tax with ₹1.25 lakh exemption and 6% inflation — delivers approximately +4.34% real return per year. Over 10 to 15 years, this difference compounds dramatically.
The comparison between Fixed Deposits and Mutual Fund SIPs is not straightforward because it depends on your tax slab, investment horizon, and the prevailing inflation rate. For investors in the 20% or 30% tax slab with a horizon of 5 years or more, equity mutual funds consistently deliver higher real returns than FDs.
FD interest is taxed at your income slab rate (up to 30%), while Mutual Fund Long Term Capital Gains (LTCG) are taxed at only 12.5% with a ₹1.25 lakh annual exemption under the Union Budget 2024. This tax efficiency makes mutual funds significantly more advantageous for long-term wealth creation.
However, FDs are safer and more predictable for short-term goals (under 3 years), emergency funds, and for investors who cannot tolerate market volatility. The right answer depends on your specific situation — which is exactly what our free calculator helps you determine.
Our Financial Reality Engine compares FD, RD (Recurring Deposit), and Mutual Funds side by side showing three layers of returns: the nominal corpus (what your statement shows), the post-tax corpus (after income tax or LTCG), and the real value in today's money (after inflation adjustment).
Simply enter your investment amount, duration, interest rate or expected CAGR, your income tax slab, and the expected inflation rate. The calculator uses the Fisher Equation for mathematically accurate real return calculations — the same method used by economists and financial planners.
The tool is completely free and all calculations happen instantly in your browser.
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