SIP vs FD

SIP vs FD

The biggest difference between SIP and FD is that SIP is a way to invest in a mutual fund where the investor invests in installments. On the other hand, Fixed deposit (FD) is a scheme offered by banks and post offices where the investor has to make a one-time or lump sum investment for a certain period. 

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What Is Sip Investment?

The full form of SIP is Systematic Investment Plan. SIP is the most preferred way to invest in mutual funds as it allows an individual to make regular investments in the stock market. Basically, you choose a mutual fund scheme and opt for SIP, where you make a fixed amount of investment monthly/quarterly, depending on your convenience. 

SIP investment is the best way to inculcate the habit of investing. The best thing is to start a SIP from as minimum as Rs. 500. Opting for SIP is suitable for those earning a fixed salary. 

Let’s understand with an example. You start a monthly investment of Rs. 12,000 in a mutual fund scheme for 23 years, assuming an annual interest of 12%. After 23 years, the total value of your investment will be ₹1,76,76,688, and the total estimated return is ₹1,43,64,688 on the invested amount of ₹33,12,000. This is the best way to grow wealth in the long term: live your golden years without adjusting your lifestyle. 

Fixed Deposit Meaning

FD full form is a fixed deposit. Fixed deposit is a scheme where you invest a considerable amount once for a certain period. The returns you earn on a fixed deposit are fixed and can range from 4% to 7.25%. The best thing about fixed deposits is that no matter how the economy performs, how the stock market moves or interest rates move, you will receive guaranteed returns at the time of maturity. 

When preserving your wealth, a fixed deposit is the best option as it allows you to park a lumpsum amount of money. 

SIP vs FD

The major difference between SIP and fixed deposits is that Systematic Investment Plan (SIP) is an investment strategy in which investors regularly invest a fixed amount of money at regular intervals (usually monthly) in a mutual f