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SIP vs RD — Which is Better?

Compare SIP (Systematic Investment Plan) vs RD (Recurring Deposit) head-to-head. See projected returns, risk levels, and decide which is right for you.

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SIP vs RD — Which is Better?
📌 How to use this comparison: SIP is already selected below. Add RD by clicking "RD – Recurring Deposit" from "Choose Instruments" on the left. Set the same monthly amount for both to get an accurate comparison.
1. Choose Instruments
Pick 2–4 to compare
SIP – Mutual Fund
per month
✓
Lumpsum (Mutual Fund)
one-time
PPF
per year
Fixed Deposit
one-time
✓
Recurring Deposit
per month
ELSS – Tax Saver Fund
per month
NPS Tier I
per month
Gold / SGB
one-time
✕ Reset to default
2. Time Period
Investment Period10 Years
📌 Why separate amounts?
FD and Gold need a one-time lump sum (say ₹7 lakh), while SIP and RD work on monthly deposits (say ₹10,000/month). Forcing the same number into both would give you completely wrong results — so each instrument has its own input.
3. Enter Your Investment Amount per Instrument
Each instrument works differently — so each gets its own amount. This way the comparison is honest.
SIP – Mutual Fund
Monthly SIP Amount
📅 Monthly
₹
₹500₹10,000₹2.0L
How much can you set aside each month?
Fixed Deposit
FD Principal (One-time)
💰 One-time
₹
₹1K₹7.00 L₹1.0Cr
The lump sum you want to park in the FD
SIP
Market-linked
₹10,000 per month → ₹22.21 L in 10 yrs
Invested
₹12.00 L
Maturity
₹22.21 L
Gains
₹10.21 L
CAGR
6.35%
VS
FD
Capital Protected
₹7.00 L one-time → ₹12.15 L in 10 yrs
Invested
₹7.00 L
Maturity
₹12.15 L
Gains
₹5.15 L
CAGR
5.67%
Corpus Growth Over 10 Years
Each line shows what your money grows to — on its own terms. SIP is monthly, FD is lump sum. The chart compares the end value honestly.
⚠️ Note — lines starting at different heights are expected: monthly investments (SIP, RD) start small and grow; lump sum investments (FD, Gold) start high from day one.
SIP₹22.21 L(6.35% CAGR)
FD₹12.15 L(5.67% CAGR)
Effective Post-Tax CAGR Comparison
This is the real number — how fast your money actually grew after all taxes.
SIP – Mutual Fund Best6.35%
Fixed Deposit 5.67%
ⓘ Returns are post-tax estimates based on historical averages and assumed tax slabs. FD/RD interest is taxed at 30% slab in this model — adjust for your actual slab. SIP/ELSS returns are market-linked and not guaranteed. NPS shows 60% lump sum only. This is not financial advice — consult a SEBI-registered advisor before investing.

SIP vs RD — Head-to-Head Comparison

In plain words

SIP and RD are both regular investment vehicles where you invest a fixed amount every month. The key difference: SIP invests in equity mutual funds with market-linked returns (historically 10-14%), while RD invests in a government-backed fixed-income scheme with guaranteed returns (currently ~6.7%). SIP has no lock-in (except ELSS), while RD has a 5-year lock-in.

How the calculation works
SIP Maturity = P × ((1 + r)^n - 1) / r × (1 + r) Where: r = Monthly Return (CAGR ÷ 12 ÷ 100), n = Total Months RD Maturity = P × ((1 + r)^n - 1) / (1 - (1 + r)^(-1/3)) Where: r = Quarterly Rate (Annual Rate ÷ 4 ÷ 100), n = Total Quarters Both use the same monthly deposit amount — the difference is the return rate.

A quick example

Compare ₹10,000/month invested via SIP vs RD for 15 years:

Monthly Investment:₹10,000
SIP Expected Return:12% p.a. (market-linked)
RD Interest Rate:6.7% p.a. (guaranteed)
Time Period:15 years

Step by step

  1. 1.SIP maturity at 12%: ₹50,36,000 (₹50.4 lakh) — market-linked, not guaranteed
  2. 2.RD maturity at 6.7%: ₹32,69,000 (₹32.7 lakh) — guaranteed by government
  3. 3.SIP corpus is ~54% higher than RD over 15 years
  4. 4.But SIP returns are not guaranteed — markets can be volatile
  5. 5.RD returns are 100% guaranteed with zero risk

So the answer is: SIP: ₹50.4 lakh (higher potential, market risk) | RD: ₹32.7 lakh (lower returns, zero risk) | SIP wins on returns, RD wins on safety

Frequently Asked Questions

Which gives better returns — SIP or RD?
SIP in equity mutual funds historically gives higher returns (10-14% CAGR) compared to RD (~6.7% p.a.). Over 15-20 years, the difference is substantial — a ₹10,000/month SIP at 12% grows to ₹50.4 lakh, while the same amount in RD at 6.7% grows to ₹32.7 lakh. However, SIP returns are market-linked and not guaranteed, while RD returns are guaranteed by the government.
Is SIP safer than RD?
No, RD is significantly safer. RD is a government-backed fixed-income instrument with guaranteed returns — your capital is completely safe. SIP in equity mutual funds carries market risk — your investment can lose value in the short term. Over the long term (10+ years), SIPs have historically outperformed RDs, but past performance does not guarantee future returns.
What is the minimum amount for SIP and RD?
SIP: Most mutual funds accept as low as ₹500/month. Some funds now offer ₹250/month SIPs. RD: Post Office RD minimum is ₹100/month. Bank RDs typically require ₹500-₹1,000/month. Both are accessible for small savers.
Can I withdraw money early from SIP and RD?
SIP: Most equity mutual funds have no lock-in (except ELSS which has 3 years). You can stop SIP anytime and redeem your money — it takes 2-3 working days. RD: Premature withdrawal is allowed but with penalty. Post Office RD allows closure after 1 year with a penalty of 2% interest reduction.
Which is better for tax saving — SIP or RD?
For tax saving: ELSS (a type of SIP) offers 80C deduction with the shortest lock-in (3 years). RD does not qualify for 80C deduction. However, SIP gains are subject to LTCG tax (10% on gains above ₹1L/year), while RD interest is fully taxable as per your income slab — no tax advantage either way.