Both a SIP and a recurring deposit (RD) let you invest a fixed amount every month. The difference is where the money goes — an RD into a guaranteed bank deposit, a SIP into market-linked funds. Here is ₹5,000 a month for 10 years.
Scenario: ₹5,000 a month for 10 years — an equity SIP assumed at 12% versus an RD at 6.5%.
Side-by-side comparison
| Metric | SIP (12%) | RD (6.5%) |
|---|---|---|
| Maturity value | ₹11,61,695 | ₹8,46,577 |
SIP (12%) vs RD (6.5%) at a glance
| SIP (12%) | RD (6.5%) | |
|---|---|---|
| Where it invests | Market-linked mutual funds | Guaranteed bank deposit |
| Returns | Higher potential, variable | Lower, fixed |
| Risk | Market risk | Virtually none |
| Lock-in | None — pause or stop anytime | Fixed term; penalty for early exit |
| Taxation | Capital-gains tax on equity gains | Interest taxed at your income slab |
| Best for | Long-term wealth building | Safe, short-to-medium goals |
The verdict
Over 10 years a SIP has historically built more wealth than an RD thanks to higher market returns and compounding — but it carries risk and no guarantee. An RD gives certainty and capital safety. For long-term goals, most investors favour SIPs; for guaranteed savings over a fixed term, an RD fits. Treat the SIP return as an estimate.
Model your own numbers with the SIP Calculator and the RD Calculator.