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Investments
SIP vs Fixed Deposit (FD) – 10-Year Wealth Comparison
SIP in diversified mutual funds harnesses India's long-term corporate GDP growth (12-15% CAGR), while Bank Fixed Deposits offer sovereign capital safety (6.5-7.5% p.a.) backed by DICGC up to ₹5 Lakhs.
Wealth Growth
Equity SIP (Mutual Funds)
High Inflation-Beating Wealth Accumulator
Expected Return12% - 15% p.a. (CAGR)
Risk LevelModerate to High (Market Linked)
Lock-InNil (Open-ended) / 3 Yrs (ELSS)
Taxability12.5% LTCG above ₹1.25 Lakhs / year
Pros
- Beats inflation by 5-7% net of taxes
- Rupee Cost Averaging protects against market volatility
- Flexible monthly contributions starting from ₹500
- Higher post-tax returns over 7-10 year horizons
Capital Safety
Bank Fixed Deposit (FD)
Guaranteed Capital Safety & Fixed Cash Flow
Expected Return6.5% - 7.5% p.a. (Fixed)
Risk LevelVery Low (DICGC Insured up to ₹5L)
Lock-In7 Days to 10 Years
TaxabilityTaxed at individual Income Tax Slab Rate
Pros
- 100% guaranteed returns unaffected by stock market crashes
- Predictable interest payout (Monthly/Quarterly/Maturity)
- Easy loan against FD (up to 90% of deposit)
- Higher rate (+0.50%) for Senior Citizens
Detailed Parameter Comparison Matrix
| Parameter | Equity SIP (Mutual Funds) | Bank Fixed Deposit (FD) | Winner |
|---|---|---|---|
| Historical 10-Yr Return | 12.5% - 14.2% CAGR | 6.8% - 7.2% Fixed | Equity SIP (Mutual Funds) |
| Capital Safety Guarantee | Market Linked (No Guarantee) | 100% Bank/DICGC Insured | Bank Fixed Deposit (FD) |
| Inflation Defense | High (>6% Real Return) | Low to Negative Post-Tax | Equity SIP (Mutual Funds) |
| Tax Efficiency | 12.5% LTCG (First ₹1.25L Exempt) | Taxed up to 39% at Slab Rate | Equity SIP (Mutual Funds) |
| Liquidity | T+2 Days Direct Bank Credit | Instant (with 1% penalty) | Tie |