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.
Related tools
More in investments
SIP (Systematic Investment Plan) and RD (Recurring Deposit) are both regular savings vehicles, but they serve very different purposes. SIP invests in market-linked mutual funds with higher potential returns but market risk. RD is a government-backed fixed-income instrument with guaranteed but lower returns. Use the comparison tool below to see which one suits your financial goals better.
SIP vs RD — ₹10,000/month Comparison
| Time Period | Total Invested | SIP @12% | RD @6.7% | SIP Advantage |
|---|---|---|---|---|
| 5 years | ₹6,00,000 | ₹8.2L | ₹7.0L | ₹1.2L |
| 10 years | ₹12,00,000 | ₹23.0L | ₹17.0L | ₹6.0L |
| 15 years | ₹18,00,000 | ₹50.4L | ₹32.7L | ₹17.7L |
| 20 years | ₹24,00,000 | ₹99.0L | ₹54.0L | ₹45.0L |
SIP returns are market-linked and not guaranteed. RD returns are guaranteed. Past SIP performance does not guarantee future returns.
When to Choose SIP vs RD
Choose SIP If
You have a long-term horizon (7+ years), can tolerate short-term volatility, want wealth creation, and aim for 10-15% annual returns through equity exposure.
Choose RD If
You need guaranteed returns, have a short-term goal (1-5 years), cannot tolerate any capital loss, or want a forced savings mechanism.
Use a Mix of Both
A balanced approach: use RD for emergency fund and short-term goals, use SIP for long-term wealth creation. The ratio depends on your risk appetite.
Tax Implications
SIP gains (equity) taxed as LTCG at 10% over ₹1L/year. RD interest is fully taxable as per your income slab. Factor taxes into your net return comparison.
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.
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:
Step by step
- 1.SIP maturity at 12%: ₹50,36,000 (₹50.4 lakh) — market-linked, not guaranteed
- 2.RD maturity at 6.7%: ₹32,69,000 (₹32.7 lakh) — guaranteed by government
- 3.SIP corpus is ~54% higher than RD over 15 years
- 4.But SIP returns are not guaranteed — markets can be volatile
- 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