FD vs SIP Calculator

Visualize the long-term wealth creation difference between traditional safe havens and mutual funds.

FD vs SIP Comparison

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Wealth Diff: +₹0 by choosing SIP.

Should You Invest in an FD or an SIP?

Fixed Deposits are safe and predictable, while SIPs are market-linked but consistently outpace inflation over the long horizon. Choosing between them depends on your risk appetite and goal duration.

Impact of Inflation

Inflation and taxes can eat into FD returns. Mutual Fund SIPs generally provide positive real returns that build generational wealth over time.

Risk vs. Reward

FDs have zero market risk, making them ideal for short-term goals. Equity SIPs carry short-term volatility but minimal long-term risk.

How to Use the FD vs SIP Calculator

This comparative tool pits traditional banking against modern equity investments. By entering identical monthly contributions and timeframes, but applying different interest rates, you can visually compare the final maturity values. It clearly illustrates the 'opportunity cost' of choosing safety over market-linked growth.

  • Enter your planned monthly savings amount.
  • Set the expected Fixed Deposit (FD) interest rate.
  • Set your realistic expected mutual fund SIP return.
  • Select your time horizon to compare both avenues side-by-side.

Analyzing the Comparison Results

The output reveals two distinct growth paths. The FD path is a slow, steady, and guaranteed curve. The SIP path, while historically volatile in the short term, showcases aggressive compounding over a longer horizon. The difference between the two final amounts is often staggering and highlights why equities are essential for beating inflation and achieving long-term goals.

Key Comparison Concepts

Opportunity Cost is the potential profit you lose out on when choosing a safer, lower-yielding investment. Real Return is your profit after deducting the inflation rate. Market Risk refers to the possibility of an investor experiencing losses due to factors that affect the overall performance of the financial markets.

FAQs

FDs carry virtually zero market risk and are insured up to ₹5 Lakhs by the RBI (DICGC). However, they carry 'inflation risk' if the post-tax return is lower than the inflation rate.

No. A healthy portfolio needs both. FDs are perfect for emergency funds and short-term goals (1-3 years), while SIPs are meant for long-term wealth creation (5+ years).

FD interest is taxed every year as per your income tax slab, which can be up to 30%. Equity SIP long-term gains are taxed at a flat 12.5% only when you sell.

No, SIP returns are market-linked and can fluctuate. In bad years, returns can be negative, which is why a long time horizon is required to average out the volatility.

Most FDs compound quarterly, while mutual funds compound daily as the NAV changes. Over a long period, the higher rate of equity funds far outweighs the quarterly compounding of FDs.

It is very difficult. If inflation is 6% and your FD gives 7%, your post-tax return might drop to 5%, meaning you are actually losing purchasing power.

During a market crash, your SIP buys mutual fund units at a heavy discount. When the market recovers, these cheap units generate massive profits. In an FD, a crash has no impact.

To see the true difference, compare them over a 10 to 15-year period. In the first 3 years, the FD might look similar or even better due to stock market volatility.

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