SIP vs. Fixed Deposit (FD) Calculator
Compare the wealth creation potential, inflation resilience, and tax efficiency of Mutual Fund SIPs versus guaranteed Fixed Deposits.
Key Differences: Equity SIP vs. Bank FD
| Feature | Mutual Fund SIP | Bank Fixed Deposit (FD) |
|---|---|---|
| Expected Returns | 12% – 15% CAGR (Market Linked) | 6.5% – 7.5% p.a. (Fixed / Guaranteed) |
| Tax Efficiency | 12.5% LTCG after ₹1.25L exemption | Taxed at full income slab rate (up to 30%) |
| Inflation Protection | High (Delivers 6%–8% real return) | Low to Negative after tax & inflation |
| Volatility / Risk | Moderate to High in short term | Zero principal volatility (DICGC Insured) |
Frequently Asked Questions (SIP vs FD FAQ)
Why is SIP much more tax-efficient than FD for high earners?
FD interest is added directly to your income and taxed at your marginal slab (up to 30% + cess). Equity SIP gains held over 12 months enjoy a ₹1.25 Lakh tax-free exemption every year, and gains above that are taxed at only 12.5%.
When should I choose FD over SIP?
FD is ideal for your Emergency Fund (6 months living expenses), short-term goals (< 3 years), and capital preservation needs where capital loss cannot be tolerated.
How does rupee cost averaging benefit SIP investors?
When markets drop, your fixed monthly SIP buys more mutual fund units at lower prices. When markets rise, your units appreciate, averaging down your cost per unit automatically without timing the market.
What is an ideal allocation between SIP and FD?
A common guideline is the Rule of (100 minus Age) in Equities (via SIPs) and the remainder in Fixed Income/FDs, adjusting for individual risk appetite and financial commitments.