Worked example
₹10,000 a month for 10 years: a SIP at an assumed 12% grows to ₹23,23,391, and the same money in a deposit at 7% grows to ₹17,37,017. The SIP is ahead by ₹5,86,373 on these numbers, but its return is assumed and can be lower.
- Money put in
- ₹12,00,000
- SIP: estimated value
- ₹23,23,391
- FD / RD: value
- ₹17,37,017
- SIP is ahead by
- ₹5,86,373
| Year | SIP: estimated value | FD / RD: value | Difference |
|---|---|---|---|
| 1 | ₹1,28,093 | ₹1,24,621 | ₹3,472 |
| 2 | ₹2,72,432 | ₹2,58,198 | ₹14,234 |
| 3 | ₹4,35,076 | ₹4,01,373 | ₹33,703 |
| 4 | ₹6,18,348 | ₹5,54,837 | ₹63,512 |
| 5 | ₹8,24,864 | ₹7,19,328 | ₹1,05,536 |
| 10 | ₹23,23,391 | ₹17,37,017 | ₹5,86,373 |
How to use this comparison
- Enter the monthly amount, the same for both choices.
- Enter the SIP return you assume. Try a cautious figure as well as a hopeful one.
- Enter the deposit rate your bank offers.
- Choose the years, and read the value of each choice at the end.
How both values are worked out
The SIP side uses the same formula as the SIP calculator. The deposit side uses the recurring deposit formula, with interest added every quarter, which is the method banks and the Post Office use.
SIP: FV = P × [((1 + r)n − 1) ÷ r] × (1 + r) · Deposit: sum of each month’s amount grown at (1 + R ÷ 400)months left ÷ 3
With the default numbers, the SIP puts in ₹12,00,000 and the deposit puts in the same ₹12,00,000.
Frequently asked questions
Is a SIP better than an FD?
On these numbers, yes: ₹10,000 a month for 10 years grows to ₹23.23 lakh as a SIP at an assumed 12%, and to ₹17.37 lakh in a deposit at 7%. But the SIP return is assumed. At 6% the SIP gives ₹16.47 lakh, close to the deposit. A deposit rate is fixed for the term you book; a SIP can lose value in a bad year.
What does the FD side of this calculator do?
It puts the same amount into a deposit every month, each earning the rate you enter with interest added every quarter, which is how banks work out recurring deposits. It shows what a safe, fixed-rate choice could do with the same monthly money.
Which one is right for me?
It depends on how long you can wait and how much loss you can bear. Money you need soon is usually kept in a deposit. Money for many years away can take some market risk. This site does not recommend any product or fund, and the result is an illustration, not investment, tax or legal advice.
What about tax?
Both results are before tax. Deposit interest is added to your income and taxed at your slab rate. Gains from a mutual fund are taxed when you sell, at rates that depend on the fund type and how long you held it. Use the income tax calculator to see your own slab.
Is the SIP return guaranteed?
No. The SIP return is assumed, not predicted. Real returns change every year and can be below the deposit rate.