Which is Better SIP or FD? How to Choose?

Whether you are a professional financial planner or new to the games of Investing, two terms would have struck your head as soon as you thought of investment i.e. Fixed Deposit (FD) and Systematic Investment Plan (SIP). 

In FDs (popularly known as ‘term deposit’), you deposit a certain sum of money which cannot be withdrawn before a specified period of maturity. In SIP, a fixed sum is invested regularly in a mutual fund scheme allowing you to buy units regularly and, thus, helping you to accumulate wealth in the long run.

While comparing the two in the terms of water, in SIP we collect water in a bucket drop by drop. Here, we go step by step, making a comparatively smaller but regular investment. Each drop of water accumulates and fills up the reserve tank which in the long term, helps its investors to achieve good alphas (returns). However, when we talk about FDs, here we generally have a bucket full of amount available for investment. We just have to see the investment opportunity, exploit that opportunity and investment the money for a stipulated lock-in period.

Today, being one of leading mutual fund advisor in Delhi NCR, we will be juxtaposing both of the above in order to find out the right option for you. Since, both of them are investment options we will obviously comparing the risks, returns and other factors of comparison.



The investment in FD can be made for small tenures such as a year, 6 months or even just a month. However, In case of SIPs the investors have to invest for a longer period of time to get good return on the invested.

Minimum amount of Investment:

In India, a person can invest in SIPs at a petty amount of just RS. 500, but, FDs are generally of a larger sum of money like Rs 1000 or more. So, in case of SIPs a person can invest small sums and still earn a good return, whereas in case of FDs the individuals have to invest a comparatively higher lump of money in order to earn a good alpha.

Nature of Returns:

The returns on FDs are in the nature of interest and are characteristically guaranteed & fixed. The returns on SIPs are in nature of dividend and capital gains.

Risk Appetite:

As said in the above mentioned point, the returns on FDs are fixed so the risk involved is minimal and it is one of the most secured investment options available in the market. On the other hand, the SIPs have a comparatively higher risk involved as the returns are not guaranteed.


If you invest in SIPs you keep investing a small amount of money every time which does not have have any substantial effect on your liquidity, However, choosing FD as an investment option requires you to investment a lump-sum amount of money and drains your liquidity.

Being a Financial Planner in Delhi, we are able to conclude that both FD and SIPs are a good investment option depending upon your risk appetite, expected returns, amount and tenure of investment. You yourself or by consulting a Mutual Fund Advisor, just have to compare your investment objectives to find the right alternative as per your needs.

related post


classification of mutual funds

© 2006-2023 VSRK Capital. All rights reserves, Built with in India

Need Help ?