Instead of multiplying your money, fixed deposits might be eating-up your money. Baffled!!! Let’s see how fixed deposits are not a good investment avenue as most of us thinks.

Real Rate of Return of Fixed Deposits

Fixed deposits offer interest rate ranging from 8.50% to 9.50% for tenure of 1 year.

So, for calculation purpose we take the following figures:

• Investment Amount: Rs.1 lakh.
• Interest Rate: 8.50% p.a. to 9.50% p.a.
• Interest Compounding : Quarterly.
• Inflation Rate: 7.00%

Inflation rate indicates the rise in the prices from the base price. Let’s say the product you could have bought for Rs.100 few years back, would cost you Rs.107.5 at present i.e. 7.00% costlier. This inflation rate when combines with the tax rate depletes your return tremendously even to the negative figure.