FD vs SIP: What will be your return on Rs 9,00,000 investment in 10 years?
Compare SIP and FD for a Rs 9,00,000 investment over 10 years. Understand returns, benefits and key differences to choose the best investment option based on your financial goals.
ZeeBiz WebTeam | Dec 15, 2024, 11:15 AM IST
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What is SIP (Systematic Investment Plan)?
- SIP is a method of investing in mutual funds by contributing a fixed amount at regular intervals.
- It allows small, periodic investments instead of a lump sum, aiming for higher returns through compounding.
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How Does SIP Work?
- Your chosen amount is auto-debited and invested in selected mutual funds at predetermined intervals.
- Units are allocated based on the NAV (Net Asset Value) at the time of investment.
- With each investment, more units are added, growing your investment corpus over time.
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SIP Returns on Rs 9,00,000 Investment in 10 Years
- Monthly investment: Rs 7,500
- Invested amount: Rs 9,00,000
- Estimate returns: Rs 8,42,543
- Total value: Rs 17,42,543
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Lumpsum SIP Returns on Rs 9,00,000 Investment in 10 Years
- Invested Amount: Rs 9,00,000
- Estimated Returns: Rs 18,95,263
- Total Value: Rs 27,95,263
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Benefits of SIP Investments
- Suitable for long-term wealth creation.
- Mitigates market volatility risks by investing periodically.
- Option to withdraw returns at maturity or periodically, as per your preference.
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What is FD (Fixed Deposit)?
- A Fixed Deposit is a financial product offered by banks and NBFCs that provides higher returns than savings accounts.
- It comes with a fixed tenure, either short-term or long-term, depending on investor preference.
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How Does FD Work?
- Investors deposit a lump sum for a fixed period at a predetermined interest rate.
- Early withdrawal is possible but may incur penalties.
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Who Offers FDs?
- Banks, post offices, and NBFCs offer FDs.
- Investors should compare interest rates and institution credibility before depositing funds.
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FD Returns on Rs 9,00,000 Investment in 10 Years
- Invested Amount: Rs 9,00,000
- Estimated Returns: Rs 11,06,812
- Total Value: Rs 20,06,812
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Advantages of FD Investments
- Guaranteed returns without market risks.
- Ideal for risk-averse investors seeking steady income.
- Multiple tenure options available based on financial goals.
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SIP vs FD: Which One to Choose?
- Higher Returns: SIP offers significantly higher returns (Rs 27,95,263) compared to FD (Rs 20,06,812).
- Risk Factor: SIP involves market risks, while FD guarantees fixed returns.
- Choose SIP for long-term wealth creation and FD for capital safety and steady returns.