Worked Example
G-Sec vs Equity-MF: which builds more wealth over 10 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
- 10
- Amount INR
- 5,00,000
- G-Sec tax %
- 30
- G-Sec return %
- 7.5
- Equity-MF tax %
- 12.5
- Equity-MF return %
- 12
Calculation
- 1.
G-Sec effective post-tax rate
7.5% × (1 − 30% tax) → 5.25%
- 2.
Equity-MF effective post-tax rate
12% × (1 − 12.5% tax) → 10.5%
- 3.
G-Sec corpus at year 10
₹5L × (1+0.052)^10 → ₹8.34 L
- 4.
Equity-MF corpus at year 10
₹5L × (1+0.105)^10 → ₹13.57 L
- 5.
Wealth difference
|834048 − 1357040| → ₹5.23 L
Conclusion
Equity-MF wins by approximately ₹5.2 lakh over 10 years — driven by return rate.
Tradeoffs
Post-tax real returns matter more than nominal headline rates. G-Sec loses more to taxation. Risk profiles differ too — guaranteed vs market-linked. Adjust for risk tolerance.