Inflation And Actual Return on FD: If you are thinking of investing your money then this news can be useful for you. It is well known that the capital market is in poor shape as a result of global inflation. Analyze the impact of inflation on your actual returns.
See Real Rate of Return
Considering it is safe in the market, some people are investing money in fixed income schemes. He is also unable to concentrate when investing on returns after accounting for inflation. So when you can understand the real rate of return from the annual inflation rate.
Understand Real Rate of Return on FD like this: Calculator
Actual rate of return = [(1+nominal rate)/(1+inflation)] -1
State Bank of India
Interest on 5-year FD: 5.50 percent
Current Inflation Rate (CPI): 7 percent
Actual Rate of Return: [(1+5.50)/ (1+7)] -1 = -1.402
Bank Of Baroda
FD interest for 5 years: 5.50 percent
Current Inflation Rate (CPI): 7 percent
Actual Rate of Return: [(1+5.50)/ (1+7)] -1 = -1.402
Interest in ICICI Bank
5-year FD: 6.10 percent
Current Inflation: 7 percent
Actual Rate of Return: [(1+6.10)/ (1+7)] -1 = -0.8411
HDFC bank
FD interest for 5 years: 6%
Current inflation 7 percent
Actual Rate of Return: [(1+6)/ (1+7)] -1 = -0.9346
Interest on Axis Bank
5-year FD: 5.75%
Current Inflation Rate (CPI): 7
Actual Rate of Return: [(1+5.75)/ (1+7)] -1 = -1.1682
Keep these things in mind,
You should know that you are in profit in fixed income schemes giving 5 to 6.5% returns. Keep in mind that whenever you choose an option, see if it is getting more interest than the current inflation rate. Inflation rate is 7 percent and interest rate in a scheme is 5 to 6 percent. So it is clear that the real rate of return will be negative.
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