NSC vs FD vs Mutual Fund: Best 5-Year Return for Rs 1 Lakh Investment?

• National Savings Certificate (NSC) offers a safe, government-guaranteed investment with a 5-year lock-in and 7.7% annual compounded interest, growing Rs 1 lakh to Rs 1.44 lakh.
• Fixed Deposits (FD) are reliable; Post Office FDs offer 7.5% over 5 years, yielding Rs 1.45 lakh from Rs 1 lakh, but interest is fully taxable.
• Lump sum Mutual Fund investments carry higher risk but potential for higher returns, with an estimated 12% annual return growing Rs 1 lakh to Rs 1.76 lakh in 5 years.
• NSC suits risk-averse investors, FD offers safety with liquidity, while Mutual Funds are for those seeking higher returns and comfortable with market volatility.
• Investment decisions should consider risk, taxes, inflation, and personal financial goals, not just returns.

Why It Matters: Choose between NSC, FD, or Mutual Funds based on your risk tolerance and return expectations for a 5-year investment.