Investment
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SIP vs Fixed Deposit
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Equity SIP vs bank FD after tax — the classic safe-vs-growth debate with real ₹ numbers.
Visual Comparison
Key Differences
| Feature | SIP (Equity) | Fixed Deposit |
|---|---|---|
| Returns | Market-linked (8–15% historical) | Fixed (6.5–7.5% current) |
| Risk | Market risk | No risk — guaranteed |
| Tax (after 1 yr) | LTCG 12.5% above ₹1.25L | TDS at 10%; slab rate tax |
| Liquidity | High (exit anytime) | Penalty on premature withdrawal |
| Ideal for | Wealth creation, 5+ years | Capital preservation, short term |
When to Choose Which
Choose SIP (Equity)
- Investment horizon is 5+ years
- You can handle short-term market fluctuations
- You want inflation-beating returns
- Building a retirement corpus
Choose Fixed Deposit
- You need guaranteed returns
- Short-term parking (1–3 years)
- Risk-averse or retiree portfolio
- Emergency fund component
Frequently Asked Questions
For 10+ year horizons, equity SIP historically delivers significantly higher returns (11–13% CAGR vs 6.5–7.5% FD). The compounding difference over 20 years is massive.
Yes. FD interest is added to your total income and taxed at your slab rate. Banks deduct 10% TDS if interest exceeds ₹40,000/year (₹50,000 for senior citizens).
For wealth creation over 5+ years: SIP is generally better. For capital safety and guaranteed returns over 1–3 years: FD wins.
Effective post-tax return = 7% × (1 – 0.30) = 4.9% p.a. Significantly below inflation over time.
Yes. A common strategy is to keep 3–6 months of expenses in FD (emergency fund) and invest surplus in SIP for long-term wealth creation.