If you’re investing ₹10,000 per month in 2025 and find yourself torn between SIP vs FD, you’re not alone. With rising inflation, unpredictable interest rates, and volatile markets, choosing between a Systematic Investment Plan (SIP) and a Fixed Deposit (FD) is no longer a straightforward decision.
This article will help you understand the key differences between SIP and FD, compare returns, assess risk, and even guide you on when to use both.
A Systematic Investment Plan (SIP) is a disciplined way of investing a fixed amount every month into mutual funds. It’s especially popular among young professionals, salaried individuals, and first-time investors.
Key Features of SIP:
SIPs are ideal for long-term goals like wealth creation, retirement, or buying a house.
A Fixed Deposit (FD) is one of India’s most trusted traditional investment options, offered by banks and NBFCs. You deposit a lump sum or invest monthly, and it grows at a fixed interest rate for a pre-decided period.
Key Features of FD:
FDs are favoured by risk-averse investors looking for capital safety and steady income.
Let’s take a practical example and compare SIP and FD returns over 5 years:
| Parameter | SIP (Mutual Fund @ 12%) | FD (Bank FD @ 7%) |
|---|---|---|
| Monthly Investment | ₹10,000 | ₹10,000 |
| Tenure | 5 Years | 5 Years |
| Total Invested | ₹6,00,000 | ₹6,00,000 |
| Maturity Value | ₹8,13,000 (approx) | ₹7,00,000 (approx) |
| Liquidity | High (exit anytime) | Medium (penalty on exit) |
| Risk | Moderate (market-linked) | Low (fixed return) |
| Taxation | LTCG @ 10% beyond ₹1 lakh | Fully taxable |
✅ Conclusion: SIPs offer significantly higher returns in the long run — making them a better choice for those who can handle short-term market fluctuations.
In 2025, most public and private sector banks in India are offering FD rates between 6.5% to 7.5%. However, a few small finance banks and cooperative banks are offering up to 9.5% interest on FDs, mostly for senior citizens or special tenure schemes.
Examples:
⚠️ Note: Higher FD interest often comes with higher institutional risk. Always verify credit ratings before investing.
Choose SIP over FD if:
Choose FD over SIP if:
Here’s a comparison of all four options in terms of risk, return, lock-in period, and tax benefits:
| Investment Type | Risk Level | Return (2025 Estimate) | Lock-In Period | Tax Benefit |
|---|---|---|---|---|
| SIP (Equity) | Moderate | 10–14% (market-linked) | None | LTCG applicable |
| FD | Low | 6.5–7.5% | 1–5 years | No (unless tax-saving FD) |
| RD | Low | 6–7% | 6 months+ | No |
| PPF | Very Low | 7.1% (tax-free) | 15 years | Yes (under 80C) |
Before investing your ₹10,000 per month, it’s wise to use a SIP vs FD calculator to simulate returns, understand maturity values, and evaluate risk.
We’re soon launching a free SIP vs FD Excel Calculator on Invest With Bull — stay tuned!
Absolutely. In fact, combining SIP and FD is one of the most practical approaches to personal finance.
There’s no universal winner in the SIP vs FD debate — it entirely depends on your risk appetite, time horizon, and financial goals.
| Situation | Best Choice |
|---|---|
| Long-term wealth creation | SIP |
| Short-term capital protection | FD |
| Balance between growth and safety | Both |
If your top priority is growth, go with SIP.
If your focus is safety, stick with FD.
If you want the best of both worlds, create a hybrid strategy.
Q1. Which is better, SIP or FD for 2025?
A: SIP is better for long-term wealth creation, while FD is safer for short-term or guaranteed returns.
Q2. Can FD give more returns than SIP?
A: Very rarely. In most cases, SIPs outperform FDs over 5+ year periods.
Q3. Is SIP risky?
A: SIPs are market-linked but reduce risk through rupee cost averaging over time.
Q4. What is the difference between SIP and FD in taxation?
A: SIPs attract long-term capital gains tax (LTCG) after ₹1 lakh; FDs are fully taxable as per your income slab.
Q5. Can I stop SIP or FD midway?
A: SIPs can be paused or stopped anytime. FDs can be broken with minor penalties.
Saving money in India isn’t hard — it’s harder when your salary is limited and… Read More
Being a stay-at-home mom doesn’t limit your earning potential. Today, moms across India (and around… Read More
The Indian mutual fund industry just got its biggest shake-up in years. Jio Financial Services… Read More
Introduction Growing your savings in 2025 doesn't have to be complicated or risky. With the… Read More
Want to invest in mutual funds without studying the market? Here are 7 lazy but… Read More
Dreaming of ₹1 crore in 10 years? Here’s a brutally honest, step-by-step plan for regular… Read More
