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Fixed Deposit vs SIP (Equity Mutual Funds)

FD vs SIP: Which is Better?

Comparing Fixed Deposit (FD) vs SIP in Equity Mutual Funds — based on estimated returns after tax and inflation, SIP (MF) tends to come out ahead for most salaried investors over 5+ years.

✓ Consider SIP (MF) if
Investing for 5+ yearsIn 20–30% tax bracketGoal is long-term growth
✓ Consider FD if
Need money within 3 yearsPay 0–5% income taxIt's your emergency fund

FD vs SIP (MF) Calculator

Adjust inputs — estimated results update live

Monthly investment
₹/mo
Duration — 10 years
FD rate
7.0%
4%7%10%
SIP (MF) return
12.0%
8%12%18%
12% = ~30yr historical avg for diversified equity funds
Estimated corpus · before tax & inflation
WINNER EST.
SIP (MF)
₹22.4L
estimated
FD
₹17.4L
estimated
SIP (MF) est. ahead by
₹5L
on ₹12L invested
over 10 years
After tax & inflation: FD may be losing purchasing power. SIP builds real wealth. Tap below to see your actual numbers.
Estimates only. Actual SIP (MF) returns depend on market performance.
Income tax slab30%
0%10%20%30%
Income above ₹20L/yr (new regime)
✦ Estimated Real Return
SIP (MF) ahead by ₹5.5L after tax
After 30% tax & 6% inflation on ₹12L invested
SIP (MF)+5.1%/yr est.
Nominal
₹22.4L
After tax
₹21.3L
Real value
₹11.9L
FD-1.0%/yr est.
Nominal
₹17.4L
After tax
₹15.8L
Real value
₹8.8L
Nominal (before tax)
SIP (MF)
₹22.4L
FD
₹17.4L
After tax
SIP (MF) · 12.5% LTCG
₹21.3L
+5.1%/yr est.
FD · income tax
₹15.8L
-1.0%/yr est.
Real value (after inflation)
SIP (MF)
₹11.9L
FD
₹8.8L
At this tax rate, estimated FD real return is negative after inflation. ₹17.4L today has the estimated purchasing power of ₹8.8L in 10 years.
Assumptions used
FD 7.0%SIP (MF) 12.0%Tax 30%Inflation 6%
Related tools
FD vs RD vs MF CalculatorRetirement Corpus CalculatorFinancial Plan in 3 MinutesDoes FD beat inflation?
realreturn.in · See what your money actually earnsEstimates only · Not financial advice · Based on current Indian tax laws

Based on estimated returns, SIP in Equity Mutual Funds tends to come out ahead of Fixed Deposit for most salaried investors — especially after accounting for tax and inflation.

  • At 30% tax, FD's estimated real return is negative after 6% inflation
  • SIP (MF) benefits from lower 12.5% LTCG tax vs income tax on FD interest
  • FD remains better for goals under 3 years or if you're in a 0–5% tax bracket

Use the calculator above to see your exact numbers.

In plain numbers

SIP in Equity Mutual Funds at 12% for 10 years on ₹10,000/month → ₹22.4L estimated (before tax)
Fixed Deposit (FD) at 7% for 10 years on ₹10,000/month → ₹17.4L estimated (before tax)
After 30% tax & 6% inflation: SIP (MF) +5.1%/yr est. real, Fixed Deposit −1.0%/yr est. real
Estimated gap: SIP (MF) ahead by ~₹5.5L after tax on the same ₹12L invested

Estimated gap after 10 years

Same ₹10,000/month, same 10 years, same ₹12L invested.

SIP (MF)
₹22.4L
+5.1%
FD
₹17.4L
−1.0%
The estimated ₹5L gap = ~4 years of your monthly savings. Actual SIP (MF) returns depend on market performance.
When does Fixed Deposit make more sense?
🛡️Fixed Deposit's guarantee is real — here's when it's the better choice.

1. Short timeline. SIP (MF) can fall 30–40% right when you need the money. Fixed Deposit gives a fixed amount on a fixed date.

2. Low tax bracket. At 0% tax, FD's estimated real return is ~+0.9%/yr. The SIP advantage shrinks significantly.

3. Emergency fund. Keep 3–6 months of expenses in Fixed Deposit — not in market-linked instruments.

Full comparison — Fixed Deposit vs SIP (Equity Mutual Funds)

↓
FactorSIP (MF)FD
Est. returns10–14% historicallyHigher6–8% fixedGuaranteed
Tax on gains12.5% LTCG above ₹1.25LLowerAt income slab (20–30%)Higher
RiskCan fall 30–40% short termZero — guaranteedSafer
Beats inflation?Est. yes at 30% slabEst. yesEst. no at 30% slab
LiquidityWithdraw anytimeFlexiblePenalty for early exit
Best for5yr+ goalsLong termUnder 3yr, emergencyShort term
Common split70% SIP (MF) + 30% FD — a common approach

Popular comparisons

↓

Detailed Fixed Deposit vs SIP comparison for specific amounts and durations.

Live ✓
₹10,000/month · 10 years
SIP (MF) ₹22.4L vs FD ₹17.4L
Coming soon
₹5,000/month · 10 years
Available soon
Coming soon
₹10,000/month · 5 years
Available soon
Coming soon
₹10,000/month · 20 years
Available soon

Related guides

↓
Does FD beat inflation in India?
After 30% tax, FD real return is often negative
→
FD vs RD vs Mutual Funds Calculator
Compare all three with fully adjustable inputs
→
How much SIP do I need for retirement?
Retirement corpus calculator with inflation adjustment
→
Common questions
Not necessarily. Based on estimated returns, SIP (MF) tends to deliver higher real returns for investors in the 20–30% tax bracket investing for 5+ years. Fixed Deposit may be more suitable for goals under 3 years, emergency funds, or lower tax brackets. Actual SIP (MF) returns are not guaranteed.
At 30% tax: Fixed Deposit at 7% gives ~4.9% after tax. With 6% inflation, the estimated real return is around −1.0%/yr — purchasing power falls even as the balance grows. At 0% tax, FD estimated real return is approximately +0.9%/yr.
SIP = Systematic Investment Plan in a Mutual Fund. You invest a fixed amount monthly into a diversified equity mutual fund. Returns are market-linked and not guaranteed — unlike Fixed Deposit which gives guaranteed returns. SIPs benefit from rupee cost averaging over long periods.
Portfolio value falls temporarily. In 2020, equity mutual fund portfolios fell approximately 35% before recovering. Historically, diversified equity SIPs held for 10+ years in India have not delivered negative returns — but past performance is not a guarantee of future results.
Yes. A common approach: keep 3–6 months of expenses in Fixed Deposit as an emergency fund, invest additional savings via SIP in Equity Mutual Funds for longer-term goals. The right split depends on your goals, risk comfort, and time horizon.
Compare FD vs RD vs Mutual Funds together

Full calculator compares all three side by side with fully adjustable inputs.

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