FD/RD vs SIP Calculator
Save the same amount every month in a guaranteed FD/RD or a market-linked equity SIP, and see which builds more — and what you trade for it.
FD/RD vs SIP: a guarantee against a growth engine
When you can spare a fixed amount every month, two very different homes compete for it. A recurring deposit (RD) — or a fixed deposit topped up monthly — hands you a guaranteed, contractually fixed return the day you sign up. You know the maturity value in advance and no market can touch it. A Systematic Investment Plan (SIP) in an equity fund instead buys mutual-fund units every month and rides the market; its return is an expectation, not a promise. This tool runs the same monthly amount through both and shows the gap — but the gap is only half the story. The risk and the tax attached to each side decide whether the extra is worth chasing.
The calculator models both paths as a start-of-month annuity (annuity-due future value), so a like-for-like comparison stays clean. In reality a bank RD compounds quarterly, which nudges the real RD figure a little away from the model — the direction of the answer does not change. You can pressure-test each side on its own with the SIP Calculator and the RD Calculator, or model a lump-sum deposit with the FD Calculator.
A worked example
Take ₹10,000 a month for 10 years — that is ₹12,00,000 of your own money either way. At a guaranteed 7% the RD/FD path grows to roughly ₹17.4 lakh; at an expected 12% the equity SIP grows to roughly ₹23.2 lakh. The table shows how the equity lead widens as the assumed return rises, on the same ₹10,000 monthly saving over 10 years.
| Assumed SIP return | SIP maturity | FD/RD at 7% | Extra from equity |
|---|---|---|---|
| 8% p.a. | ≈ ₹18.4 lakh | ≈ ₹17.4 lakh | ≈ ₹1.0 lakh |
| 10% p.a. | ≈ ₹20.7 lakh | ≈ ₹17.4 lakh | ≈ ₹3.3 lakh |
| 12% p.a. | ≈ ₹23.2 lakh | ≈ ₹17.4 lakh | ≈ ₹5.8 lakh |
| 14% p.a. | ≈ ₹26.2 lakh | ≈ ₹17.4 lakh | ≈ ₹8.8 lakh |
The pattern is unforgiving: because equity compounds on a higher base for a decade, even a two-point edge in return balloons into lakhs at the end. That is the promise of the SIP — and also its warning, because the same maths runs in reverse in a bad decade.
The part the maturity value hides: tax
Two maturity figures are never truly comparable until you tax them, and FD/RD and equity SIPs are taxed on completely different footings.
- FD/RD interest is added to your income and taxed at your slab rate — 0%, 5%, 20% or 30% — every single year it accrues, whether or not you withdraw. Banks also deduct TDS under Section 194A once interest from that bank crosses ₹50,000 in a year (₹1,00,000 for senior citizens); estimate it with the TDS Calculator.
- Equity SIP gains are taxed only when you redeem. Long-term gains — on units held over 12 months — are taxed at just 12.5%, and the first ₹1.25 lakh of long-term gains each year is fully exempt.
Guaranteed, market-linked — the honest trade-off
| Feature | FD / RD | Equity SIP |
|---|---|---|
| Return | Fixed & guaranteed | Expected, market-linked |
| Capital risk | Near zero (DICGC up to ₹5 lakh) | Can fall, even for years |
| Taxation | Slab rate, taxed yearly | 12.5% LTCG above ₹1.25L/yr |
| Beats inflation? | Barely, sometimes not | Historically, comfortably |
| Best horizon | Short (1–3 years) | Long (7+ years) |
| Liquidity | High, small penalty | High, but sell at market price |
Inflation is the silent tie-breaker
A 7% FD looks safe, but if prices rise 6% a year your real gain is barely 1% — and after slab tax on that 7%, a 30%-bracket saver's real return can slip below zero. That is the quiet trap of "safe" money: the balance keeps rising on paper while its purchasing power stands still or shrinks. Equity's job over long horizons is to clear inflation with room to spare, which is why FDs suit money you need in a year or three, while SIPs suit goals a decade away. A guaranteed number that loses to prices is only comfortable, not productive — comfort has a cost, and over 15 or 20 years that cost compounds into a materially smaller nest egg.
So which should you pick? Usually, both
This is rarely an all-or-nothing decision. Most households are best served by a blend: FDs and RDs for the emergency fund and any goal inside three years, where certainty matters more than growth; an equity SIP for retirement, a child's education, or any goal seven-plus years out, where time smooths the volatility and compounding does the heavy lifting.
- Need the money soon or can't stomach a fall? Lean FD/RD — the guarantee is the point.
- Investing for a distant goal? Lean SIP — over 10+ years equity has historically out-earned deposits by a wide margin, tax included.
- Somewhere in between? Split the monthly amount — say a safe base in an RD and the rest in a SIP — so you sleep at night and still grow.
Whatever the split, the maturity figures above are pre-tax model estimates built on a single constant return each year. Real markets do not move in straight lines, real RDs compound quarterly, and tax rules change. Use the result to size the gap and understand the trade-off — not as a guarantee of either number.