SIP vs Fixed Deposit (FD): Which is Better for You?

FD gives stability; SIP offers growth. Here’s a numbers-first comparison across returns, risk, liquidity and tax, so you can pick confidently.

Quick head-to-head

Factor	FD	SIP (Equity MFs)
Returns potential	Fixed (bank rate)	Market-linked, higher long-term potential
Risk	Low (bank/insured*	Market volatility, reduces with time in market
Liquidity	Premature withdrawal penalty	Redeem any time (T+2 or faster)
Tax	Interest taxed as income	LTCG @10% above ₹1L gains, STCG @15%
Inflation protection	Poor	Better over long horizons

When FD makes sense

Emergency buffer or money needed within 1–2 years.
Zero tolerance for volatility.

When SIP wins

Goals 5+ years away (education, retirement).
Comfortable with short-term ups/downs for higher long-term growth.

Pro tip: Combine both. Park 6–12 months expenses in FD/LIQ debt, invest the rest via SIP (with a 5–10% step-up) toward goals.
Plan with the SIP Calculator

* SIPGenie articles are generated from multiple sources and reviewed by AI, is for informational purposes only. It is not investment advice; please consult a qualified financial advisor before making any investment decisions.