Why Bank fixed deposit are not calculated in Mutual fund way .that is NAV Basis ?



Why Bank fixed deposit are not calculated in Mutual fund way ( 5 Years Calculation)

if I invest Rs 1,00,000/- it becomes 1,44,000/- in bank fixed depost

If i Invest 1,00,000/- it becomes 1,44,000 in Mutual fund with say 10000 Units then
NAV becomes 19

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Why Bank fixed deposit are not calculated in Mutual fund way .that is NAV Basis ?
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3 Replies to “Why Bank fixed deposit are not calculated in Mutual fund way .that is NAV Basis ?”

  1. You are confused.

    How the interest/net asset value are CALCULATED does not impact how much you earn, just the way it is reported!

    Fixed deposits are generally reported daily (usually at 4PM) as a NAV because calculating their actual value (because they are very complex) all the time, all day long serves no purpose to anyone…


  2. Investments in Bank fixed deposit are further utilised for lending loans at fixed rates. Therefore the interest rate on deposits is also fixed, so is the maturity value.

    Investments in Mutual fund are further utilised for buying assets (stocks) and the value of these underlying assets keep on varing. Therefore the asset value of a Mutual fund varies from time to time and there is no maturity value but market value on that day.

    HMT


  3. The reason behind it is that in case of Mutual Fund your returns are not fixed.

    A bank tells that it will pay 7 percent interest. So it is sure that it can give you 7 percent interest every year.

    On the other hand mutual fund don’t know how much they can give to you. If you invest 100 rupees in mutual fund then it can become 120 rupees or fall to 60 rupees. So mutual fund use the system of NAV to give their current value.

    Share prices are another example of a system like NAV in mutual funds. Here also there is no fixed interest rate. The price of share varies as per demand and supply.

    By the way you might find this investment strategy interesting.
    In the form of 16 questions they explain a strategy which will help common investors to invest based on their own judgment spending just 10 minutes a day and get 40 percent annual returns consistently
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