NSC vs FD vs Lumpsum: Investing ₹2,00,000 for a 5-year tenure, where will you get the best return?

When you have a lump sum of ₹2,00,000, the biggest question is where to invest it to get a good return while keeping the risk under control. Some people prefer safe options, while others are willing to take a little risk for higher returns. In such a situation, investors have three popular options: NSC, Bank FD, and Lump-sum investment in Mutual Funds. Let's understand which option can give you the highest return in 5 years.

What is NSC, and how does it work?

NSC, or National Savings Certificate, is a government savings scheme. Investment in this scheme is considered completely safe.

Tenure: 5 years
Interest Rate: Currently 7.7% per annum (compounded)
Tax Benefit: Under Section 80C

This scheme is suitable for those who do not want to take any risk and want guaranteed returns.

The Math of FD (Fixed Deposit)
FD has been one of the oldest and most trusted choices for Indian investors.

Tenure: 5 years
Interest Rate in Post Office: 7.5%
Interest Rate in Banks: Approximately 6%-6.5% (depending on the bank)
Risk: Very low
Tax: Interest is taxable
The return in FD is fixed, but the profit might be slightly weaker compared to inflation.

What is a Lumpsum Investment?
In a lump-sum investment, you invest the entire amount in a mutual fund at once.

Tenure: 5 years
Estimated Return: Around 12%
Risk: Depends on the market
Return is not guaranteed, but the potential is higher
This option can be beneficial for those who understand market fluctuations and can take some risk. How much money will a ₹2,00,000 investment yield in 5 years?
Investment Option    Estimated Interest/Return    Total Amount after 5 Years
NSC    7.7%    ₹2,89,807
Post Office FD    7.5%    ₹2,89,990
Lumpsum MF    12%    ₹3,52,468 (approximately)
Note: Mutual fund returns depend on the market. This can be higher or lower.

Which option is right for which investor?
If you want complete security - NSC
If you want some flexibility and safety - FD
If your goal is higher returns and you are willing to take risks - Lumpsum
Understand these things before investing:
Don't just look at returns; also consider the risk.
Don't ignore the tax implications.
Choose investments based on your needs, not based on trends.

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