FD vs NSC: Which will get higher return on Rs 3,00,000, Rs 6,00,000 and Rs 9,00,000 investment?
Compare Fixed Deposit (FD) and National Savings Certificate (NSC) to determine which offers higher returns on investments of Rs 3 lakh, Rs 6 lakh and Rs 9 lakh. Analyes interest rates and benefits.
Choosing between a Fixed Deposit (FD) and a National Savings Certificate (NSC) can be crucial for investors seeking secure and profitable options. Both are popular schemes offering competitive returns, but they cater to different financial goals. This article provides a detailed comparison of SBI 5 year FD and NSC based on returns for investments of Rs 3 lakh, Rs 6 lakh, and Rs 9 lakh. Understand the interest rates, maturity values, tax benefits and features of both options to make an informed decision for your investments.
(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning)
What is a Fixed Deposit (FD)?
A fixed deposit is an investment scheme offered by banks and NBFCs that provides higher returns than regular savings accounts.
Tenure Options
Fixed deposits come with fixed tenures, which can be short-term or long-term, depending on the investor's preference.
Withdrawal Conditions
Premature withdrawal is possible but incurs penalties, making FDs less liquid.
Institutions that offers FD
Banks, post offices, and NBFCs offer FD schemes. Investors should compare interest rates and reliability before investing.
Returns on SBI 5 year FD (6.5% interest rate)
Rs 3 Lakh Investment:
- Invested Amount: Rs 3,00,000
- Estimated Returns: Rs 1,14,126
- Total Value: Rs 4,14,126
Rs 6 Lakh Investment:
- Invested Amount: Rs 6,00,000
- Estimated Returns: Rs 2,28,252
- Total Value: Rs 8,28,252
Rs 9 Lakh Investment:
- Invested Amount: Rs 9,00,000
- Estimated Returns: Rs 3,42,378
- Total Value: Rs 12,42,378
What is National Savings Certificate (NSC)?
Interest Rate & Features:
Current Rate: 7.7% (compounded annually, payable at maturity)
Minimum Investment: Rs 1,000 (no maximum limit)
Tenure: 5 years
Tax Benefits
Qualifies for deduction under Section 80C of the Income Tax Act.
Transfer & Pledging
NSC can be pledged as security or transferred to another person under specific conditions, including the account holder’s death or court orders.
Returns on NSC for Different Investments (6% interest rate)
Rs 3 Lakh Investment:
- Principal: Rs 3,00,000
- Total Interest: Rs 1,01,468
- Total Value: Rs 4,01,468
Rs 6 Lakh Investment:
- Principal: Rs 6,00,000
- Total Interest: Rs 2,02,935
- Total Value: Rs 8,02,935
Rs 9 Lakh Investment:
Rs 9 Lakh Investment:
Principal: Rs 9,00,000
Total Interest: Rs 3,04,403
Total Value: Rs 12,04,403
Return comparison
For higher returns, FDs offer slightly better outcomes than NSC across all investment amounts.
NSC, however, provides tax benefits under Section 80C, making it a preferred choice for tax-saving investments.