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How much will ₹5 lakh in a Fixed Deposit grow to in 5 years?
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Calculate the exact maturity value of a ₹5 lakh fixed deposit at 8% interest, compounded quarterly over 5 years, including TDS implications.
Why FD Returns Matter for Conservative Savers
Fixed deposits remain the default savings instrument for millions of Indian households despite the rise of mutual funds. A ₹5 lakh FD at 7.1% interest compounded quarterly grows to about ₹7.10 lakh in 5 years — a 42% absolute return that feels safe but barely beats inflation. Senior citizens get 0.5% more, taking the same FD to roughly ₹7.32 lakh.
The reason FDs feel attractive is psychological: guaranteed nominal returns, deposit insurance up to ₹5 lakh per bank, no market drama. The reason they’re a poor wealth-building tool is real returns. With CPI averaging 5-6% in India, a 7.1% FD gives 1-2% real return — barely positive. Compare that to a 12% equity SIP, where even after taxes and volatility, real returns are 5-7%.
Where FDs do shine: for emergency funds (3-6 months of expenses), short-term parking (under 2 years), senior citizens prioritising income certainty, and tax-saving 5-year FDs that qualify for 80C deduction in the old regime. Just don’t use them for goals more than 5-7 years out.