FD vs SIP: Which Is Better for Long-Term Wealth Creation?

Fixed Deposits (FDs) have long been considered the safest investment option in India. Rising inflation and increasing financial awareness have changed this. Investors are now comparing FD vs SIP to understand which option truly helps in wealth creation.

What Is a Fixed Deposit (FD)?

A Fixed Deposit is a low-risk investment. In this investment, money is deposited with a bank or NBFC for a fixed tenure. The interest rate is predetermined.

• Guaranteed returns
• Low risk
• Predictable maturity value
• Interest is taxable
• Returns often struggle to beat inflation

What Is SIP (Systematic Investment Plan)?

A SIP allows you to invest a fixed amount regularly into mutual funds. These are usually equity-oriented funds. This enables disciplined investing and compounding over time.

• Market-linked returns
• Power of compounding
• Rupee cost averaging
• Best suited for long-term goals

FD vs SIP: Real Calculation Example

Monthly Investment: ₹10,000
Investment Period: 15 Years
Total Investment: ₹18,00,000

FD Returns @ 6% p.a.

• Total Invested: ₹18,00,000
• Maturity Value: ~₹29,00,000
• Total Gain: ~₹11,00,000

FD offers safety, but the growth is slow.

SIP Returns @ 12% p.a.

• Total Invested: ₹18,00,000
• Final Corpus: ~₹50,00,000
• Total Gain: ~₹32,00,000

SIP benefits from long-term equity growth and compounding.

SIP Returns @ 15% p.a. (Aggressive Scenario)

• Total Invested: ₹18,00,000
• Final Corpus: ~₹70,00,000
• Total Gain: ~₹52,00,000

FD vs SIP Comparison Table

Why SIP Outperforms FD in the Long Run

• Beats inflation over time
• Equity-driven growth
• Disciplined investing
• Ideal for retirement and wealth creation

FD protects money. SIP grows money.

FD or SIP: What Should You Choose?

✔ Use FD for emergency funds and short-term safety

✔ Use SIP for long-term wealth creation

Even ₹500 SIP Can Build Wealth

Many investors delay investing due to low amounts. In reality, even a ₹500 monthly SIP, started early, can grow into a significant corpus over time.

Conclusion: FD vs SIP

If your goal is long-term wealth creation, relying only on Fixed Deposits may not be sufficient. SIP offers a disciplined, inflation-beating approach to growing your money over time.

Disclaimer: Mutual fund investments are subject to market risks. Past performance is not indicative of future returns. Please consult a financial advisor before investing.