FD vs Mutual Funds returns estimator

The mathematical comparison applies specific compounding and tax rules to both options: 1. **Fixed Deposit (FD)**: - FDs compound quarterly: $$\text{Pre-Tax FD Value} = P \times \left(1 + \frac{R_{\text{FD}}}{400}\right)^{4t}$$ - FD interest is taxed annually at your marginal tax slab rate: $$R_{\text{FD, post}} = R_{\text{FD}} \times \left(1 - \frac{\text{Tax Slab}}{100}\right)$$ $$\text{Post-Tax FD Value} = P \times \left(1 + \frac{R_{\text{FD, post}}}{400}\right)^{4t}$$ 2. **Mutual Funds (MF)**: - Mutual Funds compound annually: $$\text{Pre-Tax MF Value} = P \times \left(1 + \frac{R_{\text{MF}}}{100}\right)^t$$ - Capital gains tax (LTCG) is applied at redemption: $$\text{MF Pre-Tax Gain} = \text{Pre-Tax MF Value} - P$$ - If currency is INR (₹), a statutory exemption of ₹1,25,000 is subtracted from gains before applying tax. $$\text{Taxable Gain} = \max(0, \text{MF Pre-Tax Gain} - \text{Exemption})$$ $$\text{MF Tax} = \text{Taxable Gain} \times \frac{\text{LTCG Tax Rate}}{100}$$ $$\text{Post-Tax MF Value} = \text{Pre-Tax MF Value} - \text{MF Tax}$$