CalculatrFD vs SIP: An Illustrative Comparison
Table of Contents
Fixed Deposits and SIPs (Systematic Investment Plans) are two of the most popular investment options in India. FD investors value safety and certainty. SIP investors chase growth. But which one is right for you? The answer depends entirely on your goal, timeline, and risk tolerance.
Calculate both options: 🏦 FD Calculator · 📈 SIP Calculator
Quick Overview — FD vs SIP
| Feature | Fixed Deposit (FD) | SIP (Equity MF) |
|---|---|---|
| Returns | Fixed at the rate agreed with the bank (check premature-closure terms) | Market-linked, not guaranteed |
| Risk | Very low (DICGC-insured up to ₹5L per depositor per bank, principal + interest combined) | High (equity risk) |
| Liquidity | Premature closure terms set by the bank | Open-ended funds are generally redeemable; ELSS has a lock-in |
| Tax on Returns | Depends on current tax law | Depends on current tax law |
| Inflation Protection | Depends on rate versus inflation | Not guaranteed; equity can lag inflation |
| Minimum Investment | Set by the bank | Set by the fund house |
| Typical Horizon | Shorter goals | Longer goals (5+ years suggested) |
Returns: Illustrative Arithmetic
The rates below are assumptions for arithmetic, not forecasts or current offers. FD figures use monthly compounding; SIP figures use monthly compounding with investment at the start of each month. Equity returns can be far lower, or negative.
Scenario: ₹5,000/month for 10 Years
| Parameter | FD (Monthly) | SIP (Equity MF) |
|---|---|---|
| Monthly Investment | ₹5,000 | ₹5,000 |
| Expected Annual Return | 7% (illustrative) | 12% (illustrative assumption) |
| Total Invested | ₹6,00,000 | ₹6,00,000 |
| Maturity Amount | ₹8,70,472 (approx) | ₹11,61,695 (approx) |
| Returns Earned | ₹2,70,472 | ₹5,61,695 |
Scenario: ₹1 Lakh Lumpsum for 10 Years
| Parameter | FD (annual compounding) | Equity MF (Lumpsum) |
|---|---|---|
| Investment | ₹1,00,000 | ₹1,00,000 |
| Assumed Annual Return | 7% | 12% |
| 10-Year Maturity | ₹1,96,715 | ₹3,10,585 |
Tax
This page does not state tax rates, exemptions or TDS thresholds for FD interest or mutual fund gains for FY 2026-27 under the Income-tax Act, 2025, because we have not confirmed them. Tax treatment differs between the two and affects take-home returns, so check incometaxindia.gov.in or ask a tax professional.
Risk and Safety
FD Safety
Bank FDs are covered by DICGC (Deposit Insurance and Credit Guarantee Corporation) up to ₹5 lakh per depositor per bank, covering principal and interest combined (DICGC FAQ). If an insured bank fails or is placed under resolution, eligible insured deposits are repaid by DICGC up to that limit through its claims process (timing is set by DICGC and the law, not immediate); anything above the limit is not covered. Coverage applies only to DICGC-insured banks and eligible deposits. Small Finance Banks often advertise higher FD rates than large banks, but the same ₹5L per-depositor-per-bank insurance limit applies; check each bank's current published rates.
SIP Risk
Equity mutual fund SIPs can fall significantly in short periods — Equity markets have fallen sharply over short periods. Longer holding periods have generally reduced the chance of a loss, but equity returns are never guaranteed and a loss is possible over any period. Never invest in equity SIPs for goals less than 5 years away.
Liquidity
| FD | SIP / Equity MF | |
|---|---|---|
| Can you withdraw anytime? | Premature closure is possible; terms and any penalty are set by the bank | Open-ended funds: generally yes; ELSS has a lock-in |
| Time to receive money | Depends on the bank | Depends on the fund and scheme |
| Partial withdrawal? | Depends on the bank and product | Usually yes, by redeeming units |
When to Choose FD vs SIP
Choose FD when:
- Goal is less than 3 years away (vacation, wedding, down payment).
- You are a senior citizen relying on interest income (banks often offer senior citizens a different rate).
- You need guaranteed, predictable returns — monthly interest payout option available.
- You need to build an emergency fund — use a short-term FD or liquid fund.
- You are investing beyond ₹5L and want to consider DICGC cover limits per bank.
Choose SIP when:
- Goal is 5+ years away (retirement, child's education, wealth creation).
- You want to beat inflation — compare the FD rate you get with inflation.
- You have a regular income and want to invest automatically every month.
Final Verdict
FD and SIP serve different purposes — they are not competitors, they are complementary:
- Emergency Fund (3–6 months expenses) → FD or Liquid Fund — safety and instant access.
- Short-term goals (1–3 years) → FD or Debt Mutual Fund — more predictable than equity (debt funds are not guaranteed).
- Long-term goals (5–30 years) → SIP in Equity Mutual Fund — market-linked growth, not guaranteed.
Related tools: Savings Calculator · Retirement Calculator · Investment Calculator