Edit : The calculation is right regarding the tax.
*The only caveat is, as we are taking money out from our initial capital (like 90% capital and 10% from profits) then after some years our whole capital will be finished while in an FD our Capital will remain as it is and which will continue to earn interest beyond those years as well.
Though we will pay more tax in FD but still for someone requiring regular income it is better as it will continue giving interest in future, while our debt fund is finished after a certain time.
Could you please explain the rationale.
Person invested 10 lakhs at 100 per unit. So he gets 10,000 units. This is his cost.
Now the Nav increases to 110. So he sells 909 units to get back 1lakh.
His cost on 909 units at 100 will be 90900. He sold it for 909 * 110 = 99,990.
His Capital Gain will be 9090. He gets taxed at 30% = 2,727.
What is wrong with the above calculation.
On the contrary, if he had invested in FD at 10%. His Tax liability will be on the entire interest at 10% will be 1 lakh and tax at 30% will be 30,000.
Edited the post above.
Lol. It wonât be. The number of units drawn will be lesser with higher NAV. 
At some point of time it is going to be finished as you are withdrawing the principal and not just the gain.
The same principle applies for FD as well. Any product if you take a portion from principle will eventually be finished.
The example was only trying to illustrate that with a Mutual Fund, your tax liability is restric ted to the amount of withdrawl unlike a FD where the entire Interest amount is liable for tax. If a person takes out only the gain, in both the product, this will ensure his principle will remain intact.
But no one is withdrawing the principal amount from FD. Only interest is taken out.
Person invested 10 lakhs at 100 per unit. So he gets 10,000 units. This is his cost.
The NAV goes to 110. His investment goes to 11 lacks.
He takes out 909 units which is approx 1 lack. AFter withdrawl
His units will be 9091 units at NAV of 110 = 10 lacks.
Only the interest is taken out. Same applies for FD. Not sure where the confusion is.
Not related to the above topic.
I get this message
Youâve replied to @Stonecold 3 times, did you know you could send them a personal message instead?
Why would I send @stonecold a personal message? Weird prompt maybe AI is working overtime. I now fear what prompts I will get if I send stonecold 8 message or 10 message.
@ShubhS9 @Bhuvan
Ok. I didnt know this. You mean to say in a mutual fund we can withdraw from the principal (original capital) and not from the interest (appreciation) ?
Not at all. Only the appreciation amount will be withdrawn. I really wish you had learnt maths beyond 8th grade.
The amount appreciated divided by the NAV to get number of units to be redeemed.
Not gonna explain how because @neha1101 already did.
Good for you⌠you can live in your dream world. Go and learn something before commenting.
Are you okay? This kind of comment is way below you. Just an observation, amenable to factsâŚ
UmmâŚmaybe because some people on the forum might consider this as spam and itâs better if you guys carry it on 1:1. Not everything thatâs automated is AI, can just be simple logical codes.
Glad you didnât tag Nithin here as well.
When did this discussion become wwe. I am lost. Good morning everone by the way.
1 Like
