FD vs SIP Calculator India

Compare Fixed Deposit (FD) returns against Mutual Fund SIP returns and lump sum investing. Discover which grows your money faster over your investment horizon.

Investment Parameters

How do you invest?

Compares an equity SIP vs a bank Recurring Deposit (RD) — same amount every month.

5005L

Invested every month into both options

yrs
1 yrs15 yrs30 yrs

How long you plan to invest

🏦 Recurring Deposit
%
3%7% (typical)12%
📈 Mutual Fund SIP
%
6%12% (historical)30%

FD vs SIP — Which is Better for Indian Investors?

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.

Fixed Deposit: Safety with Predictability

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.

SIP in Mutual Funds: Wealth Creation with Market Risk

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.

Real Numbers: ₹10,000 a Month over 10 Years

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.

Taxation: A Key Differentiator

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.

Frequently Asked Questions

For tenures of 5+ years, equity mutual fund SIPs have historically delivered significantly higher returns (12–15%) compared to FDs (6–7.5%). However, SIPs carry market risk while FDs provide guaranteed returns. For wealth creation over long periods, SIPs generally outperform. For capital preservation and short-term goals (1–3 years), FDs are safer.
This calculator always compares like-for-like cash flows so the only difference is the rate of return. In Monthly mode, the same amount is invested every month into an equity SIP (compounded monthly) versus a bank Recurring Deposit (compounded quarterly) — this is the fair real-world comparison most people face. In Lump Sum mode, the full amount is invested once into equity (annual compounding) versus an FD (quarterly compounding). Earlier calculators often compare a lump-sum FD against a drip-fed SIP, which unfairly favours the FD because its full principal works from day one.
FD interest is fully taxable as per your income slab — if you are in the 30% bracket, you effectively earn 4.9–5.3% post-tax on a 7% FD. Equity mutual fund SIP returns held for 1+ year attract LTCG tax of 12.5% on gains above ₹1.25L per year. Debt fund gains are taxed as per income slab. This makes SIPs more tax-efficient for high earners.
A lump sum investment puts the entire amount to work immediately, so it benefits from compound growth from day one. A SIP invests the amount gradually, which averages out market entry points (rupee cost averaging). In rising markets, lump sum tends to perform better; in volatile markets, SIP reduces timing risk. This calculator shows all three for comparison.
Market downturns are actually good for SIP investors — you buy more units at lower prices. When markets recover, those extra units generate higher returns. This is the power of rupee cost averaging. SIPs in equity mutual funds are designed for long-term investment (7–10 years) and should not be stopped during corrections.

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