SIP vs FD vs RD – Clear Comparison
All three are popular ways to invest regularly, but they serve very different purposes.
Last updated: Aug 3, 2026
Disclaimer: Results here are estimates for general understanding only and are not financial, tax, investment or legal advice. Mutual fund returns are not guaranteed. Always verify with official sources before making any financial decision.
01
Quick Comparison Table
| Feature | SIP (Equity Mutual Fund) | Fixed Deposit (FD) | Recurring Deposit (RD) |
|---|---|---|---|
| Return potential | 10–15% long-term (historical) | 6.5–7.5% (current) | 6.5–7.2% (current) |
| Risk | Market risk | Very low | Very low |
| Liquidity | High (with exit load in some cases) | Medium (premature withdrawal penalty) | Medium |
| Taxation | LTCG 12.5% above ₹1.25 lakh | Interest taxed as per slab | Interest taxed as per slab |
| Best for | Goals 7+ years away | Safety + known corpus | Building emergency fund |
| Guaranteed return | No | Yes | Yes |
02
Example: ₹10,000 per Month for 5 Years
SIP (assuming 12% annualised): Corpus ≈ ₹8.2 lakh
RD (assuming 6.8%): Corpus ≈ ₹7.1 lakh
FD (lump sum equivalent): Lower than RD in most cases for the same monthly commitment
Over longer periods (10–15 years) the gap in favour of equity SIPs usually widens, but there is no guarantee.
03
When to Choose What
SIP → Long-term goals (retirement, child’s education, wealth creation). You must be comfortable with market ups and downs.
FD → Money you cannot afford to lose and need in 1–3 years.
RD → Disciplined monthly saving for short-to-medium goals or an emergency fund.
04
Using All Three
Most people benefit from using all three in different proportions rather than choosing only one. Use an FD or RD for the money you cannot afford to lose, and an SIP for the long-term goals where time can do the heavy lifting.