Top PSU Bank FD vs Best Debt Mutual Fund: Which has given more on Rs 5 lakh investment in 5 years?
Top PSU Bank FD vs Top Debt Mutual Fund: The best medium to long duration mutual fund in terms of annualised lump sum returns (CAGR) is SBI Magnum Income Fund - Direct Plan. Among all PSU bank 5-year FDs, Canara Bank is providing the highest interest rate.
Top PSU Bank FD vs Top Debt Mutual Fund: Debt mutual funds invest nearly all their money in debt assets. Mutual fund investors seeking safety against market fluctuations invest in debt mutual funds. Investors who don't want to use their money immediately and want to use it after some days, months, or years also invest in debt mutual funds. Retirees seeking a regular monthly income also use debt funds to park their money and get income through a systematic withdrawal plan (SWP). A fixed deposit (FD) scheme, on the other hand, is a guaranteed return investment plan where one can make a one-time investment and get return in the form of interest. FDs come in different durations. Under Section 80C of the Income Tax Act, 1961, a 5-year FD provides tax benefits on deposits up to Rs 1.50 lakh in a financial year. Among the debt mutual fund category, medium and long duration mutual funds have an investment period of 4 to 7 years. In this write-up, know which is the top medium to long duration debt mutual fund, and the PSU FD, and which of the two has given a higher return on a Rs 5 lakh investment.
Photos: Unsplash/Pixabay
Best medium to long duration debt mutual fund
The best medium to long duration mutual fund in terms of annualised lump sum returns (CAGR) is SBI Magnum Income Fund - Direct Plan. The fund has given 7.74 per cent annualised return in the 5-year period.
5-year PSU bank FD providing best interest rate
Among all PSU bank 5-year FDs, Canara Bank is providing the highest interest rate at 6.7 per cent annually.
What is SBI Magnum Income Fund - Direct Plan?
The fund has assets under management (AUM) of Rs 1,781 crore, while its net asset value (NAV) is Rs 70.8772. The fund has given an 8.19 per cent annualised lump sum return since its inception in January 2013.
What is SBI Magnum Income Fund - Direct Plan?
Benchmarked against the CRISIL Medium to Long Duration Debt A-III Index, the fund has Rs 5,000 as the minimum lump sum investment and Rs 500 as the minimum SIP investment. It has an expense ratio of 0.78 per cent.
What is SBI Magnum Income Fund - Direct Plan?
The fund's 96.37 per cent investments are in debt, while 3.21 per cent are in others. Among debt, it has 55.39 per cent investments in Government of India Securities, 33.79 per cent in debentures, and 3.93 per cent in non-convertible debentures. It also has holdings in Torrent Power, Godrej Properties, and Tata Housing Development Co. Ltd.
Best Debt mutual fund vs Post office FD calculation
For the calculation purpose, we are taking Rs 5 lakh as the investment amount and 5 year as the investment duration.
Best Debt mutual fund vs Post office FD: Return on Rs 5 lakh deposit in Canara Bank FD
At a 6.7 per cent interest rate, a Rs 5 lakh investment in Canara Bank's 5-year FD would have provided an estimated return of Rs 1,97,033, and the estimated maturity of Rs 6,97,033.
Best Debt mutual fund vs Post office FD: Return on Rs 5 lakh investment in SBI Magnum Income Fund - Direct Plan
At 7.74 per cent annual return, the return on Rs 5 lakh lump sum investment in 5 years will be Rs 2.26 lakh.