login-icon
mahindra-finance-logo
login-icon
  • English
  • Hindi
  • Bengali
  • Marathi
  • Telugu
  • Tamil
  • Gujarati
  • Kannada
  • Odia
  • Malayalam
|

SIP vs FD: Which one should you invest in? | Mahindra Finance

mahindra-finance-author

by Mahindra Finance

|

June 30, 2023

|

3 mins read

Introduction:

India has seen a massive boom in mutual funds over the past decade. Investors are now receptive to modern investment routes such as SIPs to reap the benefits of equity. Even then, traditional financial options, including FDs, remain a popular choice. Read on to find out what type of investment you should opt for.

SIP vs FD: Know the difference

Before making a choice, it is advisable to know all about the differences between SIP and FD.

SIP or Systematic Investment Plan is a method of investing in mutual funds through smaller amounts at regular intervals. SIPs can be a good starting point for those looking to invest in equity and debt instruments. It ensures steady returns and inculcates the habit of regular investment.

FD or Fixed Deposit is a traditional and low-risk financial instrument that is mainly offered by banks, NBFCs, and post offices. When an investor opts for an FD, they make a one-time payment for the chosen period and earn interest at a fixed rate. It is ideal for those with a low risk appetite.

SIP vs FD: Detailed comparison

Let’s understand the benefits and drawbacks of SIP investment vs FD through the following table:

ParameterSIPFD
SuitabilitySuitable for aggressive as well as conservative investors.Suitable for conservative investors with a low risk appetite.
Type of investmentRegular instalments Lump sum
Risk factorInvolves risk Risk free
Type of returnsDividends and capital gainsInterest
Guarantee of returnsUncertainCertain and fixed
LiquidityHighLow
TenureGenerally long-termBoth long-term and short-term
Taxability15% tax if opted out before completion of one year; no tax on long-term investment up to 1 Lakh.Taxable based on investor’s income tax slab.

SIP vs FD: Final verdict

Whether you should invest in a SIP or FD depends on your investment goals, risk appetite, the amount you wish to invest, etc. It is recommended that you spread your funds across conservative and aggressive investment options to ensure balanced returns and security.

Use the SIP vs FD calculator to make the right choice!

Conclusion

Open a Fixed Deposit with Mahindra Finance and benefit from competitive interest rates and steady returns. Visit our website to learn more.

Choosing between "SIP vs fixed deposit" can be tricky! Both offer growth, but in different ways. SIPs, or Systematic Investment Plans, are like tiny seeds you plant regularly, letting them grow steadily over time. They're great for building long-term wealth and averaging out market ups and downs. Fixed deposits, on the other hand, are like a locked box where your money grows at a fixed rate. They're safe and predictable, but returns might not keep pace with inflation. So, "is SIP better than FD"? It depends! Consider your goals, risk appetite, and investment horizon. SIPs might be ideal for long-term wealth building, while fixed deposits could suit short-term needs or offer stability. Choose wisely, Choose Mahindra Finance.

Related articles

How To Withdraw Money From Fixed Deposit After Maturity

If you’ve recently had a fixed deposit mature, you might be wondering how to access your funds. The good news is that withdrawing money from a fixed deposit after maturity is a straightforward p...

KNOW MORE

February 23, 2024

Diversifying Investments With Multiple Types Of Fixed Deposits

Who doesn’t wish to grow their money with minimal risks? Everyone appreciates those extra gains. However, each FD investment carries some risks. But, the advantages of FD far outweigh the risks. A f...

KNOW MORE

February 23, 2024

What Is The Effective Yield In Fixed Deposits?

If you’re considering investing in a fixed deposit (FD), you’ve probably come across terms like “effective yield” and “annualised yield.” While the interest rate mentioned by banks...

KNOW MORE

March 1, 2024