Gold vs Equity vs FD Comparison for India

Summary

Gold, equity mutual funds, and fixed deposits are the three most popular investment choices in India. Each has different risk-return profiles and tax treatment. The calculator projects the growth of a lump sum or SIP across all three asset classes over your chosen time horizon, showing post-tax returns and inflation-adjusted (real) returns.

How it works

Historical returns (India, 15-year average)

Tax treatment comparison

Gold (physical or gold ETF/MF):

• STCG (under 2 years): taxed at slab rate
• LTCG (2+ years): 12.5% without indexation

Equity mutual funds:

• STCG (under 1 year): 20%
• LTCG (1+ year): 12.5% above Rs 1.25 lakh annual exemption

Fixed deposits:

• Interest taxed at slab rate (every year, even if not withdrawn)
• TDS deducted at 10% if interest exceeds Rs 40,000/year (Rs 50,000 for seniors)

The inflation problem with FDs

At 7% FD rate and 30% tax bracket, post-tax return is 4.9%. With 6% inflation, the real return is approximately -1.1%. Over long periods, FDs destroy purchasing power for higher-bracket taxpayers.

Worked example

Rs 10 lakh invested for 10 years

Gold (11% nominal):

1. Value: Rs 10,00,000 x 1.11^10 = Rs 28,39,421
2. Gain: Rs 18,39,421
3. LTCG tax: Rs 18,39,421 x 12.5% = Rs 2,29,928
4. Post-tax: Rs 26,09,493

Equity (13% nominal):

1. Value: Rs 10,00,000 x 1.13^10 = Rs 33,94,564
2. Gain: Rs 23,94,564
3. LTCG tax: (Rs 23,94,564 - Rs 1,25,000) x 12.5% = Rs 2,83,696
4. Post-tax: Rs 31,10,868

FD (7.5% nominal, 30% bracket):

1. Post-tax rate: 7.5% x 0.7 = 5.25%
2. Value: Rs 10,00,000 x 1.0525^10 = Rs 16,67,252
3. Post-tax: Rs 16,67,252

Inputs explained

• Investment amount — lump sum or monthly SIP
• Time horizon — years of investment
• Expected returns — customizable for each asset class
• Tax bracket — for FD tax calculation

Outputs explained

• Projected value — growth chart for each asset class
• Post-tax returns — after applicable capital gains or income tax
• Real returns — adjusted for inflation
• Side-by-side comparison — clear winner for your inputs

Assumptions & limitations

• Gold returns are volatile and can be flat for years. Recent outperformance (2020-2025) may not repeat.
• Equity returns assume index/diversified equity. Individual stock picking carries higher risk.
• FD rates are not fixed for the entire period. They depend on RBI repo rate cycles.
• Sovereign Gold Bonds (SGBs) offer an additional 2.5% annual interest on top of gold price appreciation and are exempt from LTCG on maturity — these are not modelled separately.
• Does not account for rebalancing between asset classes over time.