A fixed deposit (FD) gives a guaranteed, fixed return. An equity mutual fund invests in the market — higher potential returns, but no guarantee. Here is how ₹1,00,000 might grow over 10 years.
Scenario: ₹1,00,000 invested for 10 years — an equity mutual fund assumed at 12% versus an FD at 7%.
Side-by-side comparison
| Metric | Mutual fund (12%) | FD (7%) |
|---|---|---|
| Estimated value | ₹3,10,585 | ₹2,00,160 |
Mutual fund (12%) vs FD (7%) at a glance
| Mutual fund (12%) | FD (7%) | |
|---|---|---|
| Returns | Market-linked, not guaranteed | Fixed and guaranteed |
| Risk | Can fall in the short term | Virtually none |
| Liquidity | Usually high (open-ended funds) | Penalty on early withdrawal |
| Taxation | Capital-gains tax on gains | Interest taxed at your slab |
| Best for | Long-term growth above inflation | Capital safety, short horizons |
The verdict
Over a long horizon, an equity mutual fund has historically grown to far more than an FD because of higher returns and compounding — but those returns swing and are not guaranteed. An FD protects your capital with certainty but may barely beat inflation. Use FDs for safety and short-term goals, and mutual funds for long-term growth. The fund figure here is an assumption, not a promise.
Model your own numbers with the Mutual Fund Calculator and the FD Calculator.