Grow it, protect it, and know exactly what you are taking on
Fixed deposits, mutual funds, NPS, PPF and insurance, explained the way a friend inside a bank would explain them. We show the arithmetic, the tax treatment and the risk — and we never recommend a scheme, because we are not registered to.
Match the product to the horizon, not to the headline return
Almost every bad investment decision in India starts with money needed in two years being put somewhere that needs seven. Before you compare returns, be honest about when you will need the money and how much of a fall you can sit through without selling.
Conservative
Money you will need within three years, or money you simply cannot afford to see fall — an emergency fund, a deposit for a flat, school fees.
- Bank FDs and RDs, sweep-in deposits
- Liquid and ultra-short debt funds
- PPF for the long, locked portion
Balanced
Money for goals three to seven years away — a car, a wedding, a business buffer. You can accept some movement, but not a 40% drawdown.
- Hybrid and balanced advantage funds
- Short-duration and corporate bond funds
- A deposit ladder for the certain portion
Growth
Retirement, a child's higher education, wealth you will not touch for a decade. Long horizons are the only real defence against equity volatility.
- Equity index and flexi-cap funds via SIP
- ELSS where 80C headroom remains
- NPS Tier I for the retirement portion
Fixed deposit rates across ten institutions
Rates for deposits below ₹3 crore, for general citizens, as on 21 Jul 2026. Senior citizens usually receive a premium of 0.50 percentage points, shown in its own column. Bank deposits are covered by DICGC insurance up to ₹5 lakh per depositor per bank, principal and interest combined.
Click a column heading to sort.
| Institution | Senior premium | Premature penalty | |||
|---|---|---|---|---|---|
| AU Small Finance BankSmall finance · DICGC covered to ₹5 lakh | 7.25% | 7.50% | 7.25% | +0.50% | 1.00% of the applicable rate |
| State Bank of IndiaPublic sector · Term Deposit | 6.80% | 6.75% | 6.50% | +0.50% | 0.50% up to ₹5 lakh |
| HDFC BankPrivate · Regular Fixed Deposit | 6.60% | 7.00% | 7.00% | +0.50% | 1.00% of the applicable rate |
| ICICI BankPrivate · Fixed Deposit | 6.70% | 7.00% | 6.90% | +0.50% | 1.00% of the applicable rate |
| Bank of BarodaPublic sector · Baroda Tiranga Plus | 6.85% | 7.15% | 6.80% | +0.50% | 1.00% above ₹5 lakh |
| Axis BankPrivate · Fixed Deposit | 6.70% | 7.10% | 7.00% | +0.50% | 1.00% of the applicable rate |
| Punjab National BankPublic sector · PNB Uttam | 6.75% | 7.00% | 6.50% | +0.50% | 1.00% of the applicable rate |
| IDFC FIRST BankPrivate · Fixed Deposit | 7.10% | 7.25% | 7.15% | +0.50% | 1.00% of the applicable rate |
| Kotak Mahindra BankPrivate · Fixed Deposit | 6.90% | 7.00% | 6.70% | +0.50% | 0.50% of the applicable rate |
| Canara BankPublic sector · Canara Dhanvarsha | 6.85% | 6.80% | 6.70% | +0.50% | 1.00% of the applicable rate |
₹1,00,000 for one year at 7.25%
Bank fixed deposits compound quarterly by convention, so the maturity value is slightly above simple interest. Using M = P × (1 + r/f)f×t with f = 4:
Hold the same deposit for five years at 7.25% and the maturity value is ₹1,43,226 — interest of ₹43,226 against ₹36,250 under simple interest. Compounding does the work; you do not. Verify the figure yourself in our FD maturity calculator.
Tax, TDS and the laddering trick
- Interest is fully taxable. It is added to your income and taxed at your slab rate, in the year it accrues — not only when the deposit matures.
- TDS applies above ₹40,000. Banks deduct 10% once interest paid to you crosses ₹40,000 in a financial year (₹50,000 for senior citizens), and 20% if no PAN is on record. Form 15G or 15H may be filed if your income is below the taxable limit.
- Ladder rather than lump. Splitting ₹5 lakh into five deposits of ₹1 lakh maturing a year apart means a premature withdrawal breaks one deposit, not all five, and each rollover captures the prevailing rate.
- DICGC cover is per bank. ₹5 lakh of principal plus interest, per depositor, per bank. Spreading large sums across institutions matters more than chasing the last 15 basis points.
Recurring deposits work the same way with a monthly instalment. A ₹5,000 monthly RD for five years at 7.00%, compounded quarterly, matures at about ₹3,59,664 against ₹3,00,000 deposited.
Deposit rates apply to amounts below ₹3 crore and are indicative, sourced from published schedules as on , and subject to change without notice. Interest on deposits is taxable and TDS may apply. YouBankingBuddy is not a bank and does not accept deposits.
Mutual funds: four categories, four different jobs
A mutual fund is a pooled vehicle managed by an AMC registered with SEBI. It is not a deposit, it carries no assured return, and its value moves with the assets it holds. What follows is an explanation of how the categories differ — not a recommendation of any scheme.
Equity funds
Predominantly listed shares — index, large-cap, flexi-cap, mid and small-cap. The highest long-run potential and the highest volatility.
- Suited to horizons beyond seven years
- Index funds cost 0.10% – 0.30% a year
- Falls of 30% or more have happened
Debt funds
Government securities, corporate bonds and money-market paper. Steadier, but not risk free — interest-rate and credit risk both exist.
- Liquid funds for parking, 1–90 days
- Short-duration for 1–3 year goals
- Taxed at slab rate for most investors
Hybrid funds
A blend of equity and debt in one scheme — aggressive hybrid, balanced advantage, multi-asset. Rebalancing happens inside the fund.
- Smoother ride than pure equity
- Useful for three to seven year goals
- Check the equity share, it varies widely
ELSS (tax saving)
An equity fund with a three-year lock-in, eligible for deduction under Section 80C in the old tax regime. The shortest lock-in of any 80C option.
- Lock-in of 3 years per instalment
- Up to ₹1,50,000 deductible under 80C
- Full equity risk for the whole period
Project a systematic investment plan
Most SIPs in India start at ₹500 a month. Raising the instalment with each appraisal does more for the corpus than chasing a better scheme.
An assumption you choose, not a forecast we make. Indian equity index funds have historically delivered 11–13% over long periods; past performance does not indicate future returns.
Time in the market is the variable you control most cheaply. Twenty years of ₹15,000 puts in ₹36,00,000 of your own money.
Mutual fund investments are subject to market risk. Read all scheme-related documents carefully. This is an illustrative projection at an assumed constant rate of return, which markets never deliver, and is not a promised or guaranteed return. Past performance does not indicate future returns. Exit load, expense ratio and capital gains tax are not deducted. YouBankingBuddy does not provide investment advice or recommend any scheme.
Direct versus regular plans
A regular plan pays a distributor commission out of the fund, embedded in the expense ratio. A direct plan does not. On a ₹15,000 SIP over twenty years, a difference of 0.75 percentage points in expense ratio is a large sum — but a direct plan means you take every decision alone.
Expense ratio, honestly
An index fund typically charges 0.10% – 0.30% a year; an actively managed equity fund 0.60% – 1.80%. The charge is deducted daily from the NAV, so you never see an invoice — which is precisely why it deserves checking.
SIP is a method, not a product
A systematic investment plan simply automates buying on a fixed date. It averages your purchase price and removes the temptation to time the market. It does not protect against loss, and it does not make a poor scheme a good one.
NPS and PPF, compared with ELSS
All three attract a Section 80C or 80CCD deduction under the old tax regime, and all three lock your money up. They differ enormously in horizon, risk and what happens at the end.
| Feature | PPF | NPS Tier I | ELSS |
|---|---|---|---|
| Nature | Government-backed, rate notified quarterly | Market-linked, regulated by PFRDA | Equity mutual fund, regulated by SEBI |
| Indicative return | 7.10% p.a., notified | 8% – 11% assumed, not assured | 11% – 13% assumed, not assured |
| Lock-in | 15 years, extendable in blocks of 5 | Until age 60 | 3 years per instalment |
| Annual limit | ₹1,50,000 | No cap on contribution | No cap; deduction capped at ₹1,50,000 |
| Tax deduction | Section 80C up to ₹1,50,000 | 80C plus ₹50,000 under 80CCD(1B) | Section 80C up to ₹1,50,000 |
| Tax at maturity | Exempt | 60% lump sum exempt; annuity taxed at slab | LTCG at 12.5% above ₹1,25,000 a year |
| At the end | Full corpus paid out | 40% must buy an annuity | Redeem freely after lock-in |
| Capital risk | Sovereign backing | Market risk, moderated by asset caps | Full equity market risk |
PPF at the full limit for fifteen years
Depositing ₹1,50,000 at the start of each financial year for 15 years, with annual compounding at the current notified rate of 7.10%:
The rate is notified by the government each quarter and has moved between 7.10% and 8.00% over the past decade, so the actual maturity value will differ. Illustrative only.
NPS at ₹5,000 a month to sixty
A thirty-five-year-old contributing ₹5,000 a month for 25 years, at an assumed blended 10% a year:
NPS returns are market-linked and not assured. The annuity rate available at sixty is unknown today, and the annuity income is taxed at your slab rate. This is an illustrative projection, not a promised pension.
Insurance: buy cover, not returns
Insurance exists to transfer a risk you cannot absorb. Mixing it with investment produces a poor version of both. Here is what each of the three covers most Indian households need actually does — and what the insurer can decline.
| Cover | Typical sum assured | Indicative premium | Waiting period | What is commonly excluded |
|---|---|---|---|---|
| Term lifePure protection, no maturity value | ₹50,00,000 – ₹2,00,00,000 | From ₹487/mo at age 30, non-smoker, ₹1 crore | Nil for accident; 12 months for suicide | Non-disclosure of health or habits, death during an excluded activity |
| Health (individual)Indemnity, cashless at network hospitals | ₹5,00,000 – ₹25,00,000 | From ₹9,400/yr at age 30 for ₹10 lakh | 30 days initial; 2–4 yr for specified ailments | Pre-existing disease within waiting period, cosmetic treatment, room-rent above sub-limit |
| Health (family floater)One sum insured shared by the family | ₹10,00,000 – ₹50,00,000 | From ₹17,800/yr, two adults and one child | Same as individual, tracked per member | One large claim can exhaust the floater for everybody |
| Motor (own damage)Comprehensive, on declared value | IDV of the vehicle | 2.5% – 3.5% of IDV a year | Nil | Driving without a valid licence, under the influence, consequential damage |
| Motor (third party)Statutory minimum, priced by IRDAI | Unlimited for injury or death | ₹2,094/yr for a car under 1000cc | Nil | Damage to your own vehicle is not covered at all |
How much term cover?
Ten to fifteen times annual income, plus every outstanding loan, plus a provision for children's education, less liquid assets. Someone earning ₹12,00,000 a year with a ₹40,00,000 home loan usually lands between ₹1.5 Cr and ₹2 Cr.
Disclose everything
The commonest reason an Indian life claim is contested is non-disclosure — a lapsed condition, a smoking habit, an earlier policy. Declare it, accept the higher premium, and the cover holds when your family needs it.
Riders worth the premium
Critical illness and accidental disability riders usually cost little and pay a lump sum when income stops. Return-of-premium riders raise the cost sharply for a benefit you would rather have invested.
Four goals, four different homes for the money
Name the goal, date it, price it, then choose the vehicle. Every figure below is an illustrative projection at the assumed rate shown — not a promise, and not advice.
Figures are illustrative projections produced by our own SIP calculator at the assumed rates stated, and assume a constant return that markets do not deliver. Mutual fund investments are subject to market risk — read all scheme-related documents carefully. Past performance does not indicate future returns, and none of the above is a recommendation to buy any scheme.
Tax treatment, in one table
A 7.25% deposit taxed at 30% returns 5.08% in hand. A 12% equity gain taxed at 12.5% on the amount above ₹1.25 lakh returns rather more. Tax is not a footnote, it is half the decision — and it depends on the regime you have chosen.
| Instrument | Deduction available | Holding period | Tax on gain or income | TDS |
|---|---|---|---|---|
| Bank fixed deposit | Only 5-year tax-saver FD, under 80C | Taxed as it accrues | Slab rate on the full interest | 10% above ₹40,000 a year (₹50,000 for seniors) |
| Equity mutual fund | None (ELSS excepted) | Long term above 12 months | LTCG 12.5% above ₹1,25,000 a year; STCG 20% | Nil for residents |
| Debt mutual fund | None | Not applicable for most investors | Slab rate on the gain | Nil for residents |
| ELSS | Section 80C up to ₹1,50,000 | Lock-in of 3 years | LTCG 12.5% above ₹1,25,000 a year | Nil for residents |
| PPF | Section 80C up to ₹1,50,000 | 15 years | Exempt — interest and maturity | Nil |
| NPS Tier I | 80C plus ₹50,000 under 80CCD(1B) | Until age 60 | 60% lump sum exempt; annuity taxed at slab | Nil at withdrawal |
| Term life premium | Section 80C up to ₹1,50,000 | Policy term | Death benefit exempt under 10(10D) | Nil |
| Health insurance premium | Section 80D — ₹25,000, or ₹50,000 for senior parents | Policy year | Claim reimbursement is not income | Nil |
Capital gains on an equity redemption
You redeem equity units held for more than twelve months and book a gain of ₹3,00,000 in the year:
Redeem the same units within twelve months instead and the whole ₹3,00,000 is a short-term gain taxed at 20% — ₹60,000, with no exemption. Holding period is a tax decision as much as an investment one.
TDS on deposit interest
You hold ₹8,00,000 of deposits with one bank at 7.25%, earning about ₹60,000 of interest in the year:
TDS is not the final tax. The balance of ₹12,000 is payable when you file, and the post-tax return on that deposit is 5.08% rather than 7.25%. Illustrative, excluding cess and surcharge.
Tax rates and thresholds are as understood for the financial year 2026-27 under the Income-tax Act, 1961, are indicative, and differ between the old and new regimes. Nothing on this page is tax advice. Please consult a chartered accountant or qualified tax adviser about your own position before acting.
What readers ask us about investing and cover
They carry different risks, so neither is simply safer. A bank fixed deposit gives a contractual rate and is covered by DICGC deposit insurance up to ₹5 lakh per depositor per bank, but its interest is fully taxable and it can lose value in real terms if inflation runs above the post-tax return. A mutual fund carries market risk and can fall in value, with no assured return of any kind. Mutual fund investments are subject to market risk — read all scheme-related documents carefully. Most households need both: deposits for money required within three years, market-linked investments only for horizons beyond five.
Nobody can tell you, and anybody who does should be treated with suspicion. Our SIP calculator projects a value at a rate you choose, using the standard annuity-due formula. It is an illustration, not a promise. Indian equity index funds have historically delivered roughly 11% to 13% over long periods, but past performance does not indicate future returns and no return is guaranteed. Mutual fund investments are subject to market risk — read all scheme-related documents carefully.
Yes. A bank deducts TDS at 10% once the interest it pays you across all branches exceeds ₹40,000 in a financial year, or ₹50,000 if you are a senior citizen. Without a PAN on record the rate is 20%. TDS is not the final tax: FD interest is added to your total income and taxed at your slab rate, so you may owe more, or be able to claim a refund. If your total income is below the taxable limit you may file Form 15G, or Form 15H if you are a senior citizen.
All three qualify for deduction under the old tax regime. ELSS is an equity mutual fund with the shortest lock-in at three years, and it carries full market risk. PPF has a 15-year term, a rate notified each quarter — currently 7.10% p.a. — and its interest and maturity are exempt from tax. NPS Tier I is a market-linked retirement account locked until 60, with an extra deduction of up to ₹50,000 under Section 80CCD(1B), and 40% of the corpus must be used to buy an annuity. The right mix depends on your horizon and tax regime, which is a conversation for a registered adviser.
A common rule of thumb is ten to fifteen times your annual income, plus every outstanding loan, plus a provision for children's education, less any assets your family could liquidate. A person earning ₹12 lakh a year with a ₹40 lakh home loan usually lands somewhere between ₹1.5 crore and ₹2 crore of pure term cover. Buy plain term insurance rather than an investment-linked policy, disclose every health condition truthfully, and remember that cover is always subject to policy terms, exclusions, waiting periods and underwriting by the insurer.
No. YouBankingBuddy is a comparison and lead-generation platform operated by Catalyst Web Trendz Pvt. Ltd. We are not a SEBI-registered investment adviser, a mutual fund distributor or an IRDAI-licensed insurance intermediary, and nothing on this page is investment, tax or insurance advice or a recommendation to buy any scheme or policy. We explain how the products work and show indicative figures. For a recommendation, speak to a SEBI-registered investment adviser or an IRDAI-licensed intermediary.
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