Compare Fixed Deposit (FD) returns against Mutual Fund SIP returns and lump sum investing. Discover which grows your money faster over your investment horizon.
Compares an equity SIP vs a bank Recurring Deposit (RD) — same amount every month.
Invested every month into both options
How long you plan to invest
The classic debate between Fixed Deposits (FD) and Systematic Investment Plans (SIP) in mutual funds is one of the most common investment decisions for Indian savers. Both have their place, but understanding their differences helps you make a smarter choice.
A Fixed Deposit is a deposit placed with a bank or NBFC at a predetermined interest rate for a fixed tenure. Current FD rates from major banks in India range from 6.5% to 7.5% per annum (2024). FD returns are guaranteed and insured up to ₹5 lakh per depositor per bank under DICGC insurance. They are ideal for emergency funds, short-term goals (1–3 years), and capital preservation.
A Systematic Investment Plan lets you invest a fixed amount monthly in mutual funds. Equity mutual funds have delivered 12–15% annualized returns over 10-year periods historically, significantly outpacing FDs. The power of compounding, combined with rupee cost averaging, makes SIPs one of the best tools for long-term wealth creation in India.
Investing ₹10,000 every month for 10 years means ₹12 lakh of contributions. In a Recurring Deposit at 7%, that grows to roughly ₹17.3 lakh. The same ₹10,000/month in an equity SIP at 12% grows to about ₹23.0 lakh — a difference of nearly ₹5.7 lakh on identical deposits. Because both options receive the exact same monthly cash flow, the gap is purely the reward (and risk) of equity. Over 20 years the difference becomes far more dramatic thanks to compounding.
FD interest is taxed at your income tax slab rate (up to 30% + surcharge). Equity mutual fund SIP gains (held 1+ year) are taxed at just 12.5% LTCG above ₹1.25 lakh exemption per year. For someone in the 30% bracket, FDs at 7% effectively yield just ~4.9% post-tax. This makes long-term equity SIPs far more tax-efficient.