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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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…

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

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 donâ€™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.

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