RUPEECASE

EDUCATION . PERSONAL FINANCE . 2 OF 3

SAME FD . THREE REAL RETURNS

The rate is the same.
Your slab decides the rest.

Same 7 percent FD, same 5 percent inflation. Strip the tax at your slab, then strip what prices took. The higher you earn, the worse the safe asset treats you.

5% SLAB

FD rate

7.0%

After tax

6.65%

After inflation

+1.65%

20% SLAB

FD rate

7.0%

After tax

5.60%

After inflation

+0.60%

30% SLAB

FD rate

7.0%

After tax

4.90%

After inflation

-0.10%

RS 1000000 PARKED 10 YEARS . 30% SLAB

What the statement shows

Rs 1967151

→

What it can actually buy

Rs 990517

Ten years on, the number on the receipt nearly doubled. The purchasing power slipped below the lakh you put in.