Worked Example
Gold-ETF vs Equity-MF: 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
- 5,00,000
- Gold-ETF tax %
- 12.5
- Equity-MF tax %
- 12.5
- Gold-ETF return %
- 9
- Equity-MF return %
- 12
Calculation
- 1.
Gold-ETF effective post-tax rate
9% × (1 − 12.5% tax) → 7.88%
- 2.
Equity-MF effective post-tax rate
12% × (1 − 12.5% tax) → 10.5%
- 3.
Gold-ETF corpus at year 15
₹5L × (1+0.079)^15 → ₹15.59 L
- 4.
Equity-MF corpus at year 15
₹5L × (1+0.105)^15 → ₹22.36 L
- 5.
Wealth difference
|1558770 − 2235652| → ₹6.77 L
Conclusion
Equity-MF wins by approximately ₹6.8 lakh over 15 years — driven by return rate.
Tradeoffs
Post-tax real returns matter more than nominal headline rates. Equity-MF loses more to taxation. Risk profiles differ too — guaranteed vs market-linked. Adjust for risk tolerance.