Fundz 369 Post
While fixed deposits (FDs) have their advantages, they may not always be the most suitable choice for intelligent investors seeking to maximize their returns and achieve their financial goals. Here are some reasons why FDs may not be the best option for intelligent investors:
1.Taxation of Fixed Deposits returns
Interest earned on fixed deposits is considered taxable income and is added to the investor’s total taxable income for the year. The interest income from FDs is taxed according to the investor’s income tax slab rate. An investor in highest tax bracket will end up paying 30% tax on Fixed Deposit returns. That means for a person in highest tax bracket post-tax returns of fixed deposits offering return of 7% p.a. is just 4.9%.
After factoring in taxes, the net returns from FDs may be significantly lower than expected, thereby reducing their appeal as an investment option.
While fixed deposits (FDs) have their advantages, they may not always be the most suitable choice for intelligent investors seeking to maximize their returns and achieve their financial goals. Here are some reasons why FDs may not be the best option for intelligent investors:
1.Taxation of Fixed Deposits returns
Interest earned on fixed deposits is considered taxable income and is added to the investor’s total taxable income for the year. The interest income from FDs is taxed according to the investor’s income tax slab rate. An investor in highest tax bracket will end up paying 30% tax on Fixed Deposit returns. That means for a person in highest tax bracket post-tax returns of fixed deposits offering return of 7% p.a. is just 4.9%.
After factoring in taxes, the net returns from FDs may be significantly lower than expected, thereby reducing their appeal as an investment option.