SIP vs FD vs PPF returns
A SIP in an equity mutual fund has the highest expected return of the three, PPF pays a guaranteed 7.1% tax-free, and an FD pays a fixed rate that is taxed every year. Here is ₹5,000 a month for 15 years (₹9 lakh invested) in each:
| SIP (equity fund) | PPF | FD | |
|---|---|---|---|
| Return | 12% a year, assumed | 7.1%, Oct–Dec 2026 | 6.5%, assumed |
| Value after 15 years | ₹25,22,880 | ₹15,77,840 | ₹15,21,326 |
| After tax (30% slab) | ₹23,28,156 | ₹15,77,840 | ₹12,82,106 |
| Guaranteed? | No | Yes | Yes |
| Lock-in | None (ELSS: 3 years) | 15 years | Tenure you choose |
The SIP figure assumes all units are sold in one year, with 12.5% tax on gains above ₹1.25 lakh. The FD figure taxes interest every year at 31.2% (30% plus cess). Try your own amounts in the SIP Calculator, the PPF Calculator and the FD Calculator.
SIP vs FD which is better
A SIP is better for goals 7 or more years away, and an FD is better for money you need within 3 years or cannot afford to see fall. The difference is risk: an FD pays a known amount, while a SIP's value moves with the stock market and can be below what you put in for a year or more.
- Choose an FD for an emergency fund, a home down payment due in 2 years, or a fixed monthly income
- Choose a SIP for retirement, a child's education 10+ years away, or building wealth
- Tax: FD interest is taxed every year at your slab rate; SIP gains are taxed only when you sell, at 12.5% on long-term gains above ₹1.25 lakh a year
In the 30% slab, a 6.5% FD earns only about 4.5% after tax, which is close to inflation.
Is SIP safe?
A SIP is safe in the sense that it is regulated by SEBI and your money is held by the fund, not lost if the fund house shuts down. It is not safe in the sense of guaranteed: an equity SIP can show a loss over 1 to 3 years when markets fall.
Risk falls with time. Over 10 to 15 years, diversified equity funds in India have usually beaten FDs, but no return is promised. A debt fund SIP is less volatile but taxed like an FD, at your slab rate.
PPF vs SIP which is better
PPF is better if you want a guaranteed, fully tax-free return and can lock money away for 15 years; a SIP is better if you want higher long-term growth and can accept ups and downs. Many people do both: PPF as the safe base, SIP for growth.
PPF interest is set by the government every quarter (7.1% for October to December 2026) and is tax-free. In the old regime, deposits up to ₹1.5 lakh a year are also deductible under Section 123 (formerly 80C). A SIP has no fixed return and no lock-in, unless you choose an ELSS fund, which has a 3-year lock-in and the same deduction.
PPF vs SIP returns 15 years
Over 15 years, ₹5,000 a month becomes ₹15,77,840 in PPF at 7.1%. A SIP needs only about a 6.9% yearly return to match it before tax, and about 7.5% after tax. At 8% a SIP gives ₹16,48,552 after tax; at 10%, ₹19,51,221; at 12%, ₹23,28,156.
So a SIP comes out ahead unless equity returns over the 15 years are unusually poor. PPF wins on certainty: its ₹15.78 lakh does not depend on the market.
PPF vs FD which is better
PPF is better than an FD for long-term saving, because its interest is tax-free and usually higher; an FD is better when you need the money within a few years. PPF locks your money for 15 years (partial withdrawals from year 7), while an FD can be broken early for a small penalty.
Over 15 years at ₹5,000 a month, PPF gives ₹15.78 lakh against ₹12.82 lakh from a 6.5% FD after 30% tax: about ₹3 lakh more.
PPF vs FD interest rate
PPF pays 7.1% for October to December 2026, compounded yearly and tax-free. FD rates vary by bank and tenure, and are usually lower than PPF for 5-year deposits at large banks. Senior citizens get about 0.5 percentage points more on FDs. Because FD interest is taxed, compare the after-tax FD rate: 6.5% becomes about 4.5% in the 30% slab and 5.1% in the 20% slab.
Tax on SIP returns
Tax on SIP returns depends on the fund type and how long each instalment was held, because every SIP instalment counts as a separate purchase:
| Held up to 12 months | Held more than 12 months | |
|---|---|---|
| Equity funds | 20% | 12.5% on gains above ₹1.25 lakh a year |
| Debt funds (bought from April 2023) | Slab rate | Slab rate |
You pay tax only when you sell, so selling across several years lets you use the ₹1.25 lakh exemption each year. By comparison, FD interest is taxed every year at your slab rate, with TDS once interest from one bank crosses ₹50,000 (₹1 lakh for senior citizens), and PPF interest and maturity are fully tax-free.
Income tax on FD interest
FD interest is added to your income and taxed at your slab rate in the year it is earned, even if you get it only at maturity. The bank deducts 10% TDS when your interest from it crosses ₹50,000 in a year (₹1 lakh for senior citizens); you pay any extra tax yourself or get a refund when you file. If your total income is below the taxable limit, Form 15G or 15H stops the TDS. See the deduction for your amount in the TDS Calculator.
SIP vs FD vs RD
An RD (recurring deposit) is a monthly version of an FD: you deposit a fixed amount every month at a fixed rate, and it is taxed the same way as an FD. Compared with a SIP, an RD gives a guaranteed but lower return, so it suits short goals of 1 to 5 years. Work out an RD in the RD Calculator.
Which is better SIP or post office
Post office schemes such as PPF, NSC, RD and time deposits are backed by the government and pay fixed rates set every quarter; a SIP in a mutual fund is market-linked. For guaranteed returns, post office schemes are among the safest options in India. For growth over 10+ years, a SIP has historically done better. Choose post office schemes for money you cannot risk, and SIPs for long-term goals.
