RUPEECASE
EDUCATION . PERSONAL FINANCE . 3 OF 3
HOW TO READ A SAFE ASSET
Safe from a fall.
Not safe from erosion.
01
Read the real return, not the rate. Strip the tax at your slab, then strip inflation. What is left is the only number that feeds you.
02
The FD's risk is erosion, not a crash. You will never see a red day. You just buy a little less each year and never get a statement that says so.
03
An FD is a parking spot, not an engine. Right job for emergency cash and money you need in a year or two. Wrong job for a twenty-year corpus.
CLOSER
An FD never shows you a loss. That is exactly why it is the easiest place to lose money.
Real returns, tax drag and the math of safe versus growth