Romance with FD but marry SIP


Imagine you are moving at 10km per hour and your friend is moving at 11 km per hour.

After 6 minutes they are only 100 m (1/10th of 1km) apart which is not very significant. You can literally see each other.

After an hour you are 1 km apart. You can no longer see each other but still you aren’t all that far from each other. If you wish you can meet each other easily.

But after 10 hours you are 10 km apart and after 100 hours you are 100 km apart.

Now you are in two different cities. It’s too far to meet each other. Perhaps you have to speak over phone.

Likewise investing in a fixed deposit of 6% per annum or investing in a mutual fund of 10% per annum does not make a huge difference when invested for a period of 1 year or even for that matter for a period of 2 years.

However, if you were to invest for a period of 10 years to 15 years, the 4% difference but nearly 100%.

Hope this explains why even a 4% difference in returns cannot be ignored in the long term and moreover why Equity mutual fund is a more appropriate asset to invest in rather than a Fixed Deposit.

    Posted at 06:35h, 13 June Reply

    Well explained sir .This will really helpful us

  • Sivaramakrishna Movva
    Posted at 06:38h, 13 June Reply

    Great & Woderful Comparison Sir

  • Kunal somani
    Posted at 08:08h, 13 June Reply

    This is really practical example.. could be easily shared with clients.. thanks for your continuance efforts to bring new imaginations and energy every time..

  • Mohanraj
    Posted at 08:09h, 13 June Reply

    Excellent sir

  • Nitin agarwal
    Posted at 08:10h, 13 June Reply

    Very interested

  • Prabhakar Bembalgi
    Posted at 13:40h, 13 June Reply

    Very practical explanation.. Thanks

  • Upendra Sheth
    Posted at 15:20h, 13 June Reply

    Well explained and very good example.Would be very useful.

  • Upendra Sheth
    Posted at 15:21h, 13 June Reply

    Excellent.Thanks for sharing.

  • Prakash kumar Agarwal
    Posted at 17:16h, 13 June Reply

    Very good article to who do not want to know about the truth of mutual funds products.

  • Ganesh
    Posted at 23:12h, 13 June Reply

    Very much true

  • Jharna chaterjee
    Posted at 05:00h, 14 June Reply

    Example should like you had done…….simple narrative visible and for all, excellent.

  • India Tax Guide
    Posted at 07:34h, 14 June Reply

    Very Nice and Good Explained Article for Easy understanding

Post A Comment