SIP vs FD: What will be your return on Rs 6,00,000 investment in 12 years?
Compare SIP and FD returns on a Rs 6,00,000 investment. Discover how SIP's market-linked growth and compounding outperform FD's guaranteed but lower returns, ensuring informed financial planning for long-term goals.
When it comes to investing Rs 6,00,000, understanding the potential returns from a Systematic Investment Plan (SIP) versus a Fixed Deposit (FD) is crucial. SIP offers market-linked growth and compounding benefits, making it ideal for long-term investors willing to take calculated risks. On the other hand, FD provides guaranteed returns, ensuring stability and security for risk-averse individuals. This comparison highlights the estimated returns for both options, helping you make an informed decision to align with your financial goals and risk appetite.
(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning)
Systematic Investment Plan (SIP)
SIP involves regular investments in mutual funds instead of a one-time lump sum.
How It Works
The amount is auto-debited from your account and invested in mutual funds based on their NAV.
Compounding Effect
Additional units are added with every investment, leading to larger reinvestments and higher returns over time.
Flexibility in Returns
Investors can choose to receive returns periodically or at the end of the SIP tenure.
Returns After 12 Years
- Total Investment: Rs 6,00,000
- Estimated Returns: Rs 12,63,509
- Total Value: Rs 18,63,509
Fixed Deposit (FD)
FD is a secure term deposit with a fixed interest rate and a specific tenure.
How It Works
The principal amount is locked for a predetermined period, with fixed returns calculated in advance.
FD Returns After 5 Years
- Total Investment: Rs 6,00,000
- Rate of Interest: 6.5%
- Estimated Returns: Rs 5,43,335
- Total Value: Rs 11,43,335
Comparison
Over 12 years, SIP offers Rs 18,63,509, significantly higher than FD's Rs 11,43,335 after 5 years.
SIP vs FD: Better option?
While SIP offers higher potential returns with market risks, FD is a safer choice for guaranteed but lower returns.