SIP vs PPF vs Fixed Deposit (FD) Comparison
Contrast the three pillars of Indian savings side-by-side: market compounding (SIP), sovereign tax-free debt (PPF), and liquid banking deposits (FD). Use our dynamic comparison calculator below to run projections, adjust typical interest rates, and evaluate post-tax returns side-by-side.
Compare Monthly SIP Returns Across Assets
See how your monthly SIP compounds across different asset classes.
Mutual Fund (Equity)
Fixed Deposit (Bank FD)
Public Provident Fund (PPF)
SIP Growth Comparison
See how your monthly SIP compounds across instruments.
| Investment Option | Adjust Interest Rate | SIP Corpus | Invested vs Gains |
|---|---|---|---|
Mutual Fund (Equity)PopularMEDIUM RISK Diversified equity mutual funds tracking broad market indices (e.g., large cap, multi cap).Rate: 10.00–18.00% · Typical: 13.00%Compounding: annually · Rate Source: Source: AMFI India historical equity mutual fund category averages over 15 years.taxable:LTCG at 10% on gains exceeding ₹1L (if held >= 1 year). STCG at 15% (if held < 1 year). | % Nominal | ₹4,02,338Invested: ₹3,00,000 | Invested+₹1,02,338 |
Fixed Deposit (Bank FD)SafeLOW RISK Fixed interest rate investment with guaranteed returns from major Indian banks.Rate: 6.00–7.75% · Typical: 7.00%Compounding: quarterly · Rate Source: Source: State Bank of India (SBI) Fixed Deposit rates, 2026 interest schedules.taxable (Section 80TTA / 80TTB):Interest is fully taxable under the individual income tax slab rates. | % Nominal | ₹3,58,805Invested: ₹3,00,000 | Invested+₹58,805 |
Public Provident Fund (PPF)Tax FreeLOW RISK Government-backed tax-free long-term savings scheme with guaranteed returns.Rate: 7.10–7.10% · Typical: 7.10%Compounding: annually · Rate Source: Source: Ministry of Finance, India - interest rate announcement for Q1 2026.exempt exempt exempt (Section 80C) · Limit: ₹1,50,000/yr:EEE tax status: No tax on contributions, interest accrued, or withdrawal maturity.Min duration: 180m | % Nominal | ₹3,61,016Invested: ₹3,00,000 | Invested+₹61,016 |
Opportunity Cost CalloutAlert
Choosing Fixed Deposit (7.00% Nominal Pre-Tax) over Nifty 50 index funds (12.00%) over 20 years costs you ₹23,75,913 in potential returns.
Generated by returncompare.com
See how your monthly SIP compounds across different asset classes.
Comparison Matrix
| Parameter | Mutual Fund SIP (Equity) | Public Provident Fund (PPF) | Fixed Deposit (Bank FD) |
|---|---|---|---|
| Typical Return Yield | 13.00% | 7.10% | 7.00% |
| Compounding Cycle | annually | annually | quarterly |
| Risk Profile | medium | low | low |
| Tax Category | taxable | exempt exempt exempt | taxable |
| Lock-in / Liquidity | None (Liquid) | 180 months | None (Liquid) |
| Annual Contribution Limit | No Limit | ₹1,50,000/yr | No Limit |
Pros & Cons Evaluation
Mutual Fund SIP (Equity) Analysis
Advantages (Pros)
- ✓ Highest compounding returns (12-15% CAGR)
- ✓ Highly liquid (no lock-ins)
- ✓ Very tax-efficient long term
Disadvantages (Cons)
- ✗ Short-term market volatility and capital risk
- ✗ Returns are not guaranteed
Public Provident Fund (PPF) Analysis
Advantages (Pros)
- ✓ 100% tax-free returns (EEE status)
- ✓ Sovereign-backed absolute safety
Disadvantages (Cons)
- ✗ Strict 15-year lock-in period
- ✗ Lower return rate (7.1%)
💡 Executive Summary & Recommendation
For long-term wealth creation, allocate to an equity SIP. For tax-free safety and debt stability, allocate to PPF. For emergency liquidity and short-term capital preservation, place your money in Fixed Deposits.
Comparison FAQs
Which is better — SIP, PPF, or FD?
The best option depends on your financial goals, risk appetite, and time horizon. A SIP is ideal for aggressive, long-term wealth creation (5+ years). PPF is excellent for risk-averse, long-term tax-saving goals (15-year lock-in) due to its tax-free status. An FD is best for short-to-medium-term goals where capital safety and liquidity are priorities.
Is PPF better than mutual funds for long-term goals?
PPF is better if your primary concern is 100% safety and tax-free returns (EEE status). However, equity mutual funds are better for wealth creation, as they historically generate 12-15% returns over the long term, which far outweighs PPF's current 7.1% interest rate, even after accounting for capital gains tax.
What is the difference between SIP and FD returns?
A Fixed Deposit (FD) provides guaranteed, stable returns with zero capital risk, but the interest is fully taxable under your slab rate, making it less tax-efficient. A Systematic Investment Plan (SIP) in equity mutual funds offers market-linked returns that can fluctuate in the short term, but historically delivers significantly higher, inflation-beating returns over the long term with more favorable capital gains taxation.
Is SIP better than FD for long-term investment?
For investment horizons longer than 5 years, a SIP in equity mutual funds is generally superior to an FD because it leverages compounding and rupee-cost averaging to beat inflation. However, if your goal is short-term (under 3 years) or you require absolute capital preservation, a Fixed Deposit is safer.