SIP vs FD – Which is Better?

SIP (Systematic Investment Plan) and FD (Fixed Deposit) are two of the most popular investment options in India. While SIP helps you invest in mutual funds for higher long-term returns, FD offers safety and guaranteed returns.

Let’s compare SIP vs FD in detail to help you choose the right option based on your financial goals.

What is SIP?

SIP allows you to invest a fixed amount regularly (monthly or quarterly) in mutual funds. SIP investments benefit from market growth and power of compounding.

• Market-linked returns
• Best for long-term goals
• Higher risk, higher potential returns

What is FD?

A Fixed Deposit (FD) is a traditional investment where you deposit a lump sum for a fixed period at a guaranteed interest rate.

• Fixed and guaranteed returns
• Low risk investment
• Suitable for conservative investors

SIP vs FD – Key Differences

Returns Comparison Example

If you invest ₹5,000 per month for 10 years:

• SIP: Total investment ₹6,00,000 → Value ~₹11–12 lakh*
• FD: Lump sum equivalent → Value ~₹8–9 lakh

(*Returns depend on market performance)

Which Is Better – SIP or FD?

Choose SIP if:

• You want higher long-term returns
• You can tolerate market fluctuations
• Your goal is wealth creation

Choose FD if:

• You prefer guaranteed returns
• You have short-term goals
• You want zero risk

Best Strategy – SIP + FD

Many investors use both SIP and FD together. SIP for long-term growth and FD for stability and emergency funds.

Frequently Asked Questions

Is SIP riskier than FD?
Yes, SIP involves market risk, while FD offers guaranteed returns.

Can SIP give guaranteed returns?
No, SIP returns depend on market performance.

Is FD better for senior citizens?
Yes, due to safety and guaranteed income.