Saving versus investing

SIP versus fixed deposit: different jobs, same rupee

A recurring deposit and a mutual-fund SIP can both debit ₹10,000 on the 5th. One is a bank contract. The other is a market price. Mixing them up is how people either take equity risk they did not mean to take, or leave long-horizon money in an FD that inflation quietly eats.

What an FD promises

A rupee fixed deposit is a contract with a bank or post office: you lock a sum, they quote a rate, you get a maturity value if you do not break it early. Premature withdrawal usually cuts the rate. Senior-citizen rates can be higher. Deposit insurance covers a limited amount per bank, not your entire net worth across every product.

IndiaKit’s FD calculator compounds annually in a simple model. Real bank products may compound quarterly. Always read the deposit advice. PPF is a different animal — 15-year lock-in, EEE tax treatment in the current framework, and a government-set rate that can change.

What a SIP does not promise

A SIP is a standing instruction to buy units at whatever NAV the fund publishes that day. The 12% “expected return” in our SIP tool is a planning assumption used across the industry, not a SEBI guarantee. Equity funds can finish a decade well above or below that line. Debt funds behave more like interest products but still mark to market.

If the money is an emergency fund you might need in six months, an FD or a liquid instrument is the honest match. If the money is a 15-year education corpus and you can sit through a 30% drawdown, a diversified equity SIP is a different conversation. Run both calculators. Do not pick the larger future-value number as if it were cash.