Investing10 min read

SIP vs FD: Which Grows Your Money Faster, With a ₹1,000 a Month Comparison

By BlinkMoney Editorial

Compare ₹1,000 monthly SIPs and FDs after tax and inflation across 3 to 20 years, with guidance on choosing by goal horizon and risk.

SIP vs FD: Which Grows Your Money Faster, With a ₹1,000 a Month Comparison

For ₹1,000 a month, a SIP that earns 10% to 12% a year ends well ahead of an FD or RD paying about 6.5%, over 5, 10 and 20 years, even after tax and 6% inflation. Over 3 years the SIP is still ahead on these assumptions, but only by a few thousand rupees in today's money, and a SIP has no guaranteed floor. That gap is why the advice below splits by horizon: an FD for money needed within 3 years, a SIP for 5 years or more, and a mix in between.

The short answer

Under 3 years: use an FD or RD. The SIP's margin is thin and a market fall can land on the day you need the money.
3 to 5 years: split it. Put the amount you need on a fixed date into an FD, and let the rest run as a SIP if you can stay invested through a fall.
5 years and more: a SIP. In every 5-year case in the tables below, the SIP comes out ahead of the FD.

What the numbers assume

Amount: ₹1,000 at the end of each month for 3, 5, 10 and 20 years. That is ₹36,000, ₹60,000, ₹1,20,000 and ₹2,40,000 paid in.
FD and RD: 6.5% a year, compounded quarterly, applied to each monthly instalment. This is in line with the top general rates large banks published in late October 2026 for 3 to 5 year deposits. HDFC Bank lists 6.50% for 3 years to under 4 years 7 months, and ICICI Bank lists 6.55% for 3 to 5 years. Longer tenures pay less at some banks: HDFC lists 6.15% for 5 years to 10 years, and SBI lists 6.05% for 5 to 10 years. The 6.5% rate therefore favours the FD. Most banks stop at 10 years, so the 20-year FD row assumes renewal at the same rate.
SIP: 10% and 12% a year, applied monthly. These are assumptions, not forecasts. The figures are before expense ratio and exit load.
FD tax: interest is taxed every year at the 5%, 20% or 30% slab under the FY 2026-27 new regime. The tax is deducted from that year's interest and the rest is reinvested.
SIP tax: equity fund gains are taxed at 12.5% above ₹1.25 lakh in a financial year, for units held more than 12 months. Units held 12 months or less are taxed at 20%. All units are assumed to be sold in one financial year.
Excluded: the 4% health and education cess, any surcharge, and exit loads.
Inflation: 6% a year. "Today's rupees" means the amount divided by 1.06 for each year of the horizon.

Results after tax

In rupees at the time of payout

Horizon	Paid in	FD/RD, 5% slab	FD/RD, 20% slab	FD/RD, 30% slab	SIP at 10%	SIP at 12%
3 years	₹36,000	₹39,424	₹38,868	₹38,501	₹41,669	₹42,940
5 years	₹60,000	₹70,040	₹68,355	₹67,252	₹77,324	₹81,533
10 years	₹1,20,000	₹1,65,224	₹1,56,966	₹1,51,713	₹2,04,732	₹2,29,902
20 years	₹2,40,000	₹4,70,376	₹4,20,750	₹3,91,000	₹7,10,030	₹9,11,172

Before tax, the FD earns ₹1,68,082 over 10 years on ₹1,20,000 paid in. The SIP at 12% earns ₹2,30,039 on the same payments.

In today's rupees, after 6% inflation

Horizon	Paid in	FD/RD, 5% slab	FD/RD, 20% slab	FD/RD, 30% slab	SIP at 10%	SIP at 12%
3 years	₹36,000	₹33,101	₹32,635	₹32,326	₹34,986	₹36,054
5 years	₹60,000	₹52,338	₹51,078	₹50,255	₹57,781	₹60,926
10 years	₹1,20,000	₹92,260	₹87,649	₹84,716	₹1,14,321	₹1,28,376
20 years	₹2,40,000	₹1,46,666	₹1,31,192	₹1,21,916	₹2,21,391	₹2,84,108

The "paid in" column is the nominal total. The inflation-adjusted columns are useful for comparing the options with each other, not for matching against the nominal amount.

At a 5% slab, the FD's after-tax rate is about 6.3% a year, close to inflation. At a 20% slab it falls to about 5.3%, and at 30% to about 4.6%. Both are below 6% inflation. The FD balance still rises at those slabs, but its purchasing power does not keep up.

The SIP's tax is small until gains pass the ₹1.25 lakh exemption. At 10% or 12%, the tax on a 10-year SIP is under ₹200. Over 20 years at 12%, the tax is about ₹78,000.

How much the SIP has to earn to win

The SIP does not need 10% to beat an FD. In today's rupees and after tax, the SIP needs about 6.2% a year before tax to match an FD at a 5% slab over 5 to 10 years. The bar rises to about 5.2% to 5.4% at a 20% slab, and about 4.6% to 4.7% at a 30% slab.

These are break-even returns, not forecasts. Equity returns in a given period can fall short of them, and a bad stretch can push a 3-year or 5-year result below the FD.

What the 3-year result does and does not show

At three years, the SIP at 10% finishes between ₹1,900 and ₹2,700 ahead of the FD in today's rupees, depending on the slab. That margin is small next to the swings equity can show in three years.

If the portfolio returned nothing at all, the ₹36,000 paid in would come back as ₹36,000 in rupees. That is about ₹30,200 in today's money. The three-year row is not a case for putting money you need in three years into a SIP.

FD vs RD vs SIP

An FD is a lump sum placed for a fixed tenure at a rate set when you book it. For a ₹1,000 monthly saving, the same approach means booking a new FD each month, or a ladder of FDs with different maturities.

An RD does the same job in one account. You pay a fixed monthly instalment for a fixed tenure, and each instalment earns interest from the date it is paid.

A SIP buys mutual fund units each month at that day's NAV. The value moves with the market, and the final amount depends on the period you hold.

	FD (lump sum)	RD (monthly)	SIP (equity mutual fund)
Safety	DICGC covers up to ₹5 lakh per depositor per bank, principal and interest together	Same DICGC cover as an FD	Market-linked. Not guaranteed, and can fall, including over 3 to 5 years. Not covered by DICGC
Liquidity	Can be closed early, but the bank pays a lower rate for the time actually held	Early closure follows the bank's rules, and the rate for the time held applies	Redeemed on business days. Proceeds usually arrive in 1 to 3 working days, at that day's NAV
Lock-in	None on regular FDs. Tax-saver FDs are locked for five years	None on regular RDs	None on most equity funds. ELSS funds are locked for 3 years. Equity funds may charge an exit load on redemptions within a year
Tax	Interest taxed yearly at your slab rate. Bank TDS of 10% applies above ₹50,000 a year (₹1 lakh for seniors), and 20% without PAN	Same as an FD	12.5% on gains above ₹1.25 lakh a year for units held over 12 months. 20% on units held 12 months or less

Deposits offer a known rate and principal protection up to the DICGC limit. A SIP has no fixed rate and no capital protection, and its value can be below the amount invested on any given date.

Which to choose by goal horizon

Under 3 years: use an FD or RD

Money needed within 3 years usually has a fixed date, such as a fee, a down payment or a planned purchase. An FD's rate is set when you book it, and the DICGC cover applies up to ₹5 lakh per bank. The SIP's three-year margin in the tables above is too thin to offset a market fall close to the deadline.

If you are weighing an FD against a liquid fund for short-term money, FD vs Liquid Funds: Differences and How to Choose covers that choice.

3 to 5 years: split the money

In this range, the answer depends on how much a fall would disrupt your plans. Put the amount you need on a known date into an FD matched to that date. Let the rest run as a SIP only if you can stay invested through a market fall. The break-even returns above show that a SIP needs roughly 4.6% to 6.3% a year, depending on the slab, to match an FD here. That is below the 10% to 12% assumption, but it is still a bar the portfolio has to clear.

5 years and more: use a SIP

At 5 years and beyond, the SIP is ahead of the FD in every case modelled. At 10 years, a 10% SIP reaches ₹1,14,321 in today's rupees, against ₹87,649 for an FD at a 20% slab. The gap grows with time, because the SIP's compounding is not reduced by a yearly tax on the interest it earns.

For the full SIP tables at ₹500, ₹1,000 and ₹5,000 a month over 5 to 30 years, see the BlinkMoney SIP returns guide. To test a daily amount against a target, use the BlinkMoney Daily SIP Calculator on the BlinkMoney homepage.

To run your own FD vs SIP check, enter your monthly amount, the rate and the number of years. Then apply tax at your slab and deflate by 6% for each year. The steps above show exactly how each figure was built.

Sources

Government and official sources

Income Tax Department, Tax on long-term capital gains: 12.5% above ₹1.25 lakh for listed equity and equity-oriented mutual fund units.
Government of India, Finance Bill 2026 memorandum: income-tax slab rates for FY 2026-27 under the new regime.
DICGC, A Guide to Deposit Insurance: ₹5 lakh per depositor per bank, including interest.
DICGC, Information leaflet 2024-25: deposit insurance covers recurring deposits as well as fixed deposits.
SEBI Investor Education, Exit Load and A Guide to ELSS: exit load mechanics and the 3-year ELSS lock-in.
AMFI, Understanding Mutual Funds: open-ended fund redemptions are credited within 1 to 3 working days, depending on the scheme.

Bank rate pages

HDFC Bank, FD Interest Rates (October 2026): general rates by tenure, and the premature withdrawal rule.
ICICI Bank, FD Interest Rates: general and senior citizen rates by tenure.

Reported sources

CNBC-TV18, FD rates in October 2026: SBI, HDFC Bank, ICICI Bank compared: SBI FD rates.
NDTV Profit, Income Tax 2026: Big relief for FD investors over TDS confusion: TDS thresholds and the department's clarification for FY 2026-27.
BankBazaar, Recurring Deposit Interest Rates in India 2026: RD rates across banks, which mostly fall between about 6% and 7.3% for general customers.
Taxguru, Tax Implications of Investing in FDs, MFs, PMS and AIFs: 20% short-term rate on equity fund units held 12 months or less.

BlinkMoney

This article is for general educational awareness only and does not constitute investment, tax, legal, or financial advice. Market-linked products are subject to risk, and past performance does not guarantee future results. Taxation, liquidity, regulation, and product terms can change over time. Before investing or depositing, review the latest scheme documents, bank rate schedules, costs, and risk factors, and consider speaking with a SEBI-registered investment adviser if you need advice specific to your situation.