SIP vs FD: Growth With Risk or Certainty That Shrinks?
Written by lemmatools Editorial Team · Last updated: · 6 min read
Two different promises
An FD promises a number: 7% p.a., guaranteed, insured up to ₹5 lakh. An equity SIP promises a process: buy every month, capture the market’s long-term growth (historically 11–13% in India), accept that any given year can be −20%. The FD’s risk is invisible but real — after 30% tax its ~4.9% return trails 5–6% inflation, so long-held FD money loses purchasing power with certainty. The SIP’s risk is visible volatility that has historically faded over long holds.
The numbers by horizon (₹10,000/month)
- 5 years: FD/RD ≈ ₹7.1L vs SIP at 12% ≈ ₹8.2L — but a bad 5-year window can leave the SIP behind. Genuine contest; short-horizon money belongs in deposits.
- 10 years: RD ≈ ₹17.2L vs SIP ≈ ₹23.2L. The gap (₹6L) now dwarfs plausible bad luck.
- 20 years: RD ≈ ₹52L vs SIP ≈ ₹99.9L. Post-tax and post-inflation, the deposit route has roughly stood still while the SIP tripled real wealth.
Run your own amount through the SIP and FD calculators — the divergence compounds, which is why the honest answer depends almost entirely on the date you need the money.
The horizon rule
Under 3 years: deposits, no debate — sequence risk can be brutal. Three to seven years: split by temperament, or use hybrid/debt funds. Beyond seven: equity SIP for the growth money, keeping only the emergency fund in deposits. And if a market crash would make you stop the SIP, budget for that honestly — the historical SIP returns quoted everywhere belong only to those who kept buying through the crashes.