Worked Example
Tax-Saver-FD vs ELSS: which builds more wealth over 15 years?
Scenario
Anjali, age 35, mid-career marketing manager in Mumbai, ₹18 lakh annual income, married with one child, ₹70K monthly household expenses
Inputs
- Years
- 15
- Amount INR
- 15,00,000
- ELSS tax %
- 12.5
- ELSS return %
- 12
- Tax-Saver-FD tax %
- 30
- Tax-Saver-FD return %
- 6.5
Calculation
- 1.
Tax-Saver-FD effective post-tax rate
6.5% × (1 − 30% tax) → 4.55%
- 2.
ELSS effective post-tax rate
12% × (1 − 12.5% tax) → 10.5%
- 3.
Tax-Saver-FD corpus at year 15
₹15L × (1+0.045)^15 → ₹29.24 L
- 4.
ELSS corpus at year 15
₹15L × (1+0.105)^15 → ₹67.07 L
- 5.
Wealth difference
|2923828 − 6706956| → ₹37.83 L
Conclusion
ELSS wins by approximately ₹37.8 lakh over 15 years — driven by return rate.
Tradeoffs
Post-tax real returns matter more than nominal headline rates. Tax-Saver-FD loses more to taxation. Risk profiles differ too — guaranteed vs market-linked. Adjust for risk tolerance.