SIP vs RD Calculator
Compare the wealth created by a Mutual Fund SIP versus a Bank Recurring Deposit. See the power of equity compounding.
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Extra Wealth Created by SIP
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Why Compare SIP and RD?
When starting your investment journey, the most common dilemma is choosing between a Bank Recurring Deposit (RD) and a Mutual Fund Systematic Investment Plan (SIP). Both require you to invest a fixed amount every month, but their growth mechanics are entirely different.
Our SIP vs RD Calculator helps you visualize exactly how much extra money you can make by accepting the moderate risk of mutual funds over the guaranteed (but lower) returns of a bank deposit.
How the Calculation Works
- Total Investment: This is simply your monthly amount multiplied by the total number of months.
- RD Maturity: We calculate the future value using standard monthly compounding based on the fixed interest rate provided by banks.
- SIP Maturity: We use the estimated annual return rate (usually 10% to 15% for equity funds) compounded monthly to project your future wealth.
Which Should You Choose?
If you need the money in 1 to 3 years for a confirmed expense (like a child's school fee or a vacation), an RD is safer because it protects your capital from short-term market crashes.
However, if you are saving for long-term goals (5 to 20+ years) like retirement or buying a house, SIP is the absolute winner. The power of compounding in equity mutual funds easily beats inflation, which a standard RD struggles to do.
Frequently Asked Questions
Q. How does the SIP vs RD Calculator work?
Simply enter your monthly investment amount, tenure, expected SIP return rate, and expected RD interest rate. The calculator will instantly show you the total invested amount and the final maturity values for both options side-by-side.
Q. Which gives better returns: SIP or RD?
Historically, Mutual Fund SIPs offer significantly higher returns (usually 12% to 15%) compared to Bank RDs (usually 6% to 7%). Over a long period, SIPs generate much more wealth due to equity compounding.
Q. Are the calculated returns guaranteed?
RD returns are fixed and guaranteed by the bank. However, SIP returns are linked to stock market performance and are subject to market risks, so the calculated SIP value is an estimated projection.