📊 FD vs SIP Investment Calculator
📈 SIP (Systematic investment plan)
🏦 FD (Fixed Deposit)
📘 Tax Example (Simple Explanation)
SIP (Equity Mutual Fund):
No yearly tax while invested.
After 1 year holding → first ₹1.25 lakh profit is tax-free.
Above that → only 12.5% tax on gains.
This is why long-term investors often prefer SIP for wealth creation.
🏦 Today Fixed Deposit Rates (India 2026)
Understanding: FD Vs SIP — What Is it?
The choice between a Fixed Deposit (FD) and a Systematic Investment Plan (SIP) depends mainly on three things: your goal, how much risk you can handle, and how long you want to invest.
In simple terms, FD gives safety and fixed return. SIP gives growth but returns can change because it depends on the stock market.
- FD = capital protection and predictable income
- SIP = long-term wealth creation through compounding
Fixed Deposit (FD)
A Fixed Deposit is a bank product where you deposit a lump sum amount for a fixed period and earn a guaranteed interest rate.
- Best for short-term goals (1 to 3 years)
- Returns usually between 6% and 8.6% in 2026
- No market risk
- Money value does not fluctuate
- Suitable for emergency fund and near-term expenses
Some small finance banks are offering higher rates. For example: Unity Small Finance Bank FD Interest Rates
Systematic Investment Plan (SIP)
A SIP is a method of investing regularly (usually monthly) into mutual funds. Most SIP investors choose equity mutual funds.
- Best for long-term goals (5 years or more)
- Returns are market-linked, not guaranteed
- Historical average returns around 11% to 15%
- Value goes up and down in short term
- Suitable for retirement, children education and wealth building
2026 Market Insights
- Small Finance Banks are offering up to 8.6% interest in early 2026
- Large banks generally offer 6% to 7.5%
- Top performing small and mid-cap SIPs have shown 5-year returns above 20% CAGR
Taxation (Basic Understanding)
FD and SIP are taxed differently in India.
- FD interest is added to your total income and taxed as per your tax slab
- TDS limit for FY 2025-26: ₹50,000 (₹1,00,000 for senior citizens)
- SIP in equity mutual funds has no yearly tax while invested
- Long-term capital gains up to ₹1.25 lakh per year are tax-free
Official income tax rules can be checked here: Income Tax Department Guidance
Which One Should You Choose?
- If your goal is within 1-3 years → FD is usually better
- If your goal is 5+ years away → SIP is usually better
- If you want safety → choose FD
- If you want growth → choose SIP
Differences Between FD and SIP (2026)
| Feature | Fixed Deposit (FD) | Systematic Investment Plan (SIP) |
|---|---|---|
| Investment Style | Lump sum deposit once | Regular small investments monthly |
| Returns | Fixed and known in advance (approx. 6% – 9.1%) | Market-linked; varies yearly (historically ~12% – 15%) |
| Risk Level | Very low risk | Moderate risk (value may go up and down) |
| Minimum Amount | Usually ₹1,000 – ₹10,000 | Can start from ₹100 – ₹500 |
| Liquidity | Premature withdrawal penalty possible | Money can be withdrawn anytime (exit load may apply) |
| Tax Treatment | Interest taxed as income | Long-term gains taxed only after redemption |
| Inflation Impact | Often struggles to beat rising prices | Historically beats inflation over long period |
| Flexibility | Amount and tenure fixed | Can increase, pause or stop anytime |
Monthly Investment: ₹10,000 Total Invested in 5 years: ₹6,00,000
- Estimated FD interest rate: 7% p.a.
- Estimated SIP return: 12% annual average
Estimated SIP value: ~₹8.4 – ₹8.8 lakh
SIP OR Fixed Deposit — Practical Comparison (Real Life View)
Your money does not change. Interest continues normally. You feel safe.
Value may go down for some time. But you buy units cheaper during fall. Long-term investors actually benefit.
Bank allows withdrawal but charges penalty. You lose some interest.
You can redeem anytime. Money usually credited in 1–3 working days.
Returns are predictable. Usually better than SIP for short duration.
Returns uncertain. May be higher or lower than FD.
Money grows slowly. Inflation reduces real value.
Compounding becomes strong. Wealth difference becomes large.
Suitable for safety-focused investors. Good for retirees and emergency savings.
Suitable for long-term planners. Good for retirement and children's education.
FD protects your money today. SIP builds your money for the future.
FD vs SIP: Which is Better?
In 2026, the answer is not about which product is superior. The real answer depends on how long you can stay invested and how comfortable you are with changes in value.
A Fixed Deposit and a Systematic Investment Plan serve two different purposes in personal finance. One protects money. The other grows money.
FD is for stability and certainty.
SIP is for growth and future wealth.
How People Actually Use FD in Real Life
Most households in India use FD when the money has a fixed use and fixed date. The main goal is safety, not high return.
- Emergency savings kept for medical need
- Money reserved for school or college fees
- Funds required for a purchase in the near future
- Retired individuals needing stable income
The main benefit here is predictability. The investor already knows the maturity amount. There is no uncertainty.
How SIP Works in Real Life
SIP is usually used by salaried individuals who save every month. The aim is not immediate use of money but future financial security.
- Retirement planning
- Children higher education planning
- Long-term wealth creation
- Beating inflation over many years
Unlike FD, the value of SIP does not move in a straight line. Some months it increases, some months it falls. But over long periods, compounding starts making a visible difference.
Time Horizon Is the Real Decision Factor
Most confusion between FD and SIP happens because investors compare them for the same time period. They are not designed for the same duration.
- 1–3 years → FD usually works better
- 5+ years → SIP generally becomes more effective
- 10+ years → SIP compounding becomes significant
What Is the FD vs SIP Investment Calculator?
It estimates how much money a lump sum bank deposit may grow into, and compares it with how much a regular monthly investment could grow over the same period.
The calculator helps you understand:
- Expected maturity value of FD
- Estimated future value of SIP
- The impact of time on compounding
- How long-term investing changes results
It does not predict the stock market. Instead, it gives a realistic projection using average return assumptions so you can see the difference clearly before making a decision.
Why Many Investors Use Both
In practice, experienced investors rarely choose only one option.
- FD is used as financial safety
- SIP is used for financial growth
This balance helps avoid panic during market falls while still allowing wealth to grow over time.
How The Tax work: Taxation (FY 2025-26)
In India, Fixed Deposits and SIP investments are taxed very differently. FD interest is treated like salary income, while SIP gains are treated as investment gains. Because of this, the final money you receive can change significantly.
| Feature | Fixed Deposit (FD) | SIP – Equity Mutual Fund | SIP – Debt Mutual Fund |
|---|---|---|---|
| Tax Type | Income from Other Sources | Capital Gains | Capital Gains |
| Tax Rate | Your income tax slab (0%–30%+) | 20% (≤12 months) or 12.5% (>12 months) | Your income tax slab |
| TDS | 10% if interest exceeds ₹50,000 (₹1L seniors) | No TDS for residents | No TDS for residents |
| Tax-Free Limit | No exemption | First ₹1.25 lakh long-term gain tax-free | No exemption |
| 80C Benefit | Only 5-year tax saver FD | Only ELSS SIP | None |
How FD Tax Works (Practical)
FD interest is added to your yearly income. It does not matter whether you withdraw the interest or not — it is still taxable every year.
Senior citizens can claim deduction up to ₹50,000 under Section 80TTB on interest income.
How SIP Tax Works
Each SIP instalment is treated as a separate investment. Tax depends on how long that instalment stayed invested.
- Sold within 12 months → Short Term Capital Gain (20%)
- Held more than 12 months → Long Term Capital Gain
- First ₹1.25 lakh yearly gain is tax-free
Debt mutual funds (after April 2023) are taxed according to your income slab, similar to FD, but without TDS deduction during investment.