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Manish M Tulasi

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Mitra Robotย โ€ขย 4h

Mutual Funds: A Closer Look at the Real Returns Many people say that mutual funds are a great investment, but have we truly calculated the real returns, considering all factors like inflation and taxes? Let me break it down with a simple example. Initial Investment: โ‚น25 Lakh Over a period of 10 years, let's say your โ‚น25 lakh investment grows to โ‚น50 lakh. Thatโ€™s a โ‚น25 lakh gain, right? Now, letโ€™s factor in inflation at 6% per year: After 10 years, the value of โ‚น25 lakh decreases due to inflation. Adjusted for inflation: โ‚น25 Lakh (initial) ร— 6% inflation annually = โ‚น13 Lakh loss in purchasing power over 10 years. So, your โ‚น50 Lakh at the end of 10 years is effectively worth โ‚น37 Lakh in today's money after inflation. But wait, thereโ€™s more! Taxation: The government will tax your โ‚น25 Lakh profit (after inflation) at 10%, so: โ‚น24 Lakh ร— 10% tax = โ‚น2,40,000 tax payable. Now, let's subtract the tax and the inflation impact: Profit after tax and inflation: โ‚น25 Lakh (initial profit) - โ‚น2,40,000 (tax) - โ‚น13 Lakh (inflation loss) = โ‚น9,60,000 - โ‚น10,00,000. So, over 10 years, youโ€™re left with just โ‚น9-10 Lakhs in profit, or approximately โ‚น1 Lakh per year. Now, ask yourself: Is this really such a great return? Mutual funds may offer growth, but when you factor in inflation and taxes, the net returns might not be as impressive as they seem at first glance. Letโ€™s make smarter, more informed investment decisions!

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