SIP vs RD Calculator — Compare Returns

Monthly Investment

₹

₹500₹5,00,000

SIP Expected Return

% p.a.

130

RD Interest Rate

% p.a.

115

Investment Period

yrs

130

Winner

SIP

Market-linked

₹0

Invested₹0

Gains₹0

Guaranteed

₹0

Invested₹0

Interest₹0

SIP returns are projected at the entered rate — not guaranteed. RD interest is fixed and uses quarterly compounding.

What is a SIP vs RD?

A SIP vs RD Calculator compares the maturity amount of two instruments — a Systematic Investment Plan and a Recurring Deposit — on the same monthly investment for the same duration. The key distinction is the rate engine: SIP returns are market-linked and entered as an expected annual return, while RD interest is a fixed rate guaranteed by your bank, and Indian banks compound RD interest quarterly.

This comparison is one of the most common dilemmas facing first-time investors in India. A salaried employee saving ₹5,000 per month has two obvious options: open an RD with their existing bank for guaranteed, low-effort returns, or set up a mutual fund SIP for potentially higher but variable wealth creation. The SIP vs RD Calculator makes this comparison concrete by showing rupee amounts side by side — not abstract percentages.

The default RD rate in this calculator is 7.1% p.a., reflecting the SBI standard tenure rate as of 2025. The default SIP return is 12% p.a., a widely used long-term assumption for diversified equity funds in India. By adjusting both rates to match your actual bank offering and fund category, you get a personalised comparison. You can also use this alongside the SIP vs Lumpsum Calculator to understand three different strategies — monthly SIP, monthly RD, and one-time lumpsum — together.

A critical nuance: unlike RD interest (which is guaranteed and fixed regardless of market conditions), SIP returns are not assured. Years with negative market returns will reduce your actual SIP corpus below the projected figure. This risk is what earns you the premium over an RD over long periods — the so-called "equity risk premium."

How to use this SIP vs RD calculator

Enter your Monthly Investment — the fixed amount you save each month, whether you currently put it in an RD or a SIP. Common starting amounts are ₹2,000–₹10,000. The same amount will be applied to both the SIP and RD calculation.
Set the SIP Expected Return — enter the annual return you expect from your chosen mutual fund category. Use 10–11% for large-cap or index funds, 12% for diversified equity funds, and 8–9% for balanced or aggressive hybrid funds. Remember this is an expectation, not a guarantee.
Enter the RD Interest Rate — check your bank's current RD rate for your preferred tenure and enter it here. SBI and most nationalised banks offer 6.5–7.25% as of 2025; small finance banks may offer 7.5–9%. Use the actual rate your bank offers, not a generic number.
Select the Investment Period — set the tenure in years for which you plan to invest monthly. RDs are typically 1–5 years; SIPs are most effective at 5 years and above. Try both a 3-year and a 10-year scenario to see how the SIP Advantage grows with time.
Analyse the SIP Advantage — check the final output labelled SIP Advantage. If it is large relative to the RD Corpus, the case for accepting market risk via SIP is strong. If it is small (short tenure, low SIP rate assumption), consider an RD for that particular goal.

Formula & Methodology

SIP Corpus — Future Value of Monthly Annuity Due:

FV_SIP = P × [(1 + r)ⁿ − 1] ÷ r × (1 + r)

Where:
- P = monthly SIP amount (₹)
- r = monthly return rate = annual SIP rate ÷ 12 ÷ 100
- n = total months = investment period × 12

RD Corpus — Sum of Quarterly-Compounded Monthly Instalments:

FV_RD = Σ P × (1 + R/4)^(4 × k/12) for k = 1 to n

Where:
- P = monthly RD instalment (₹)
- R = annual RD interest rate ÷ 100
- k = months remaining for each instalment (n − instalment number + 1)
- n = total months

Worked example — ₹5,000/month for 5 years:

- Total invested = ₹5,000 × 60 = ₹3,00,000
- SIP at 12% p.a.: r = 0.01, FV = 5,000 × [(1.01)⁶⁰ − 1] ÷ 0.01 × 1.01 ≈ ₹4,08,348
- RD at 7.1% p.a. (quarterly): each instalment compounded at 7.1%÷4 = 1.775% per quarter for remaining tenure ≈ ₹3,57,520
- SIP Advantage = ₹4,08,348 − ₹3,57,520 = ₹50,828

Key assumptions:
- SIP return is assumed flat at the entered rate — actual mutual fund returns vary year to year
- RD uses quarterly compounding in line with RBI directive to Indian banks
- No TDS or tax deduction is applied — returns are pre-tax for both instruments
- RD monthly instalment does not change during the tenure (no step-up)

For a deeper view of RD-only calculations with step-up and interest payout options, see the Recurring Deposit Calculator. To model what happens when a similar amount is compared against a Fixed Deposit, use the FD vs RD Calculator.

Frequently Asked Questions

What is the difference between SIP and Recurring Deposit?

A Systematic Investment Plan (SIP) invests your monthly amount into mutual funds, which are market-linked and carry varying risk and reward. A Recurring Deposit (RD) is a bank product that guarantees a fixed interest rate for the full tenure. SIP returns can be significantly higher over long periods but fluctuate, while RD returns are predictable and insured up to ₹5 lakh by DICGC.

How does the SIP vs RD Calculator compare returns?

The SIP vs RD Calculator takes the same monthly investment amount and applies two different return engines to it — the SIP formula (annuity future value with monthly compounding) and the RD formula (quarterly compounding, as used by Indian banks). You enter separate rates for each: your expected SIP return and the actual RD rate your bank offers. The difference between the two final corpora is shown as SIP Advantage.

Is SIP better than RD for long-term investment in India?

Over periods of 7 years or more, equity mutual fund SIPs have historically outperformed RDs significantly, primarily because equity returns compound at 10–14% p.a. versus RD rates of 6.5–7.5% p.a. However, SIP carries market risk and its returns are not guaranteed. For short investment horizons (1–3 years) or for capital that you cannot afford to lose, an RD is the more appropriate instrument.

What is the RD interest rate offered by Indian banks in 2025?

Most nationalised banks such as SBI and Bank of Baroda offer RD rates of 6.5–7.25% p.a. for tenures of 1–5 years as of 2025. Small finance banks and some private sector banks offer higher rates of 7.5–9% p.a. Senior citizens typically get an additional 0.25–0.5% p.a. The default RD rate of 7.1% in this calculator reflects SBI's standard 1-year RD rate.

How is RD interest calculated in Indian banks?

Indian banks use quarterly compounding for RD interest, not simple interest. The formula for each instalment is: A = P × (1 + r/4)^(4t), where P is the monthly deposit, r is the annual interest rate, and t is the remaining time in years. Each of the 12 or more monthly instalments compounds for a different duration — the first instalment for the full tenure and the last for just one month.

Are SIP returns guaranteed like RD interest?

No. SIP returns depend entirely on the performance of the underlying mutual fund scheme, which in turn reflects market movements. The expected return you enter is an assumption, not a guarantee. RD interest, by contrast, is contractually fixed at the time of booking and guaranteed by the bank. This fundamental difference in risk profile is why SIP and RD serve different financial goals.

Is RD interest taxable in India?

Yes. RD interest is fully taxable as income from other sources under the Income Tax Act, at your applicable income tax slab rate. If annual interest income from bank deposits exceeds ₹40,000 (₹50,000 for senior citizens), the bank deducts TDS at 10%. Equity SIP gains are taxed differently — as Long-Term Capital Gains (LTCG) at 12.5% above ₹1.25 lakh per year for holdings over one year.

When should I choose RD over SIP?

Choose an RD when you need certainty of returns — for a fixed goal in 1–3 years such as a car down payment, home renovation, or emergency fund building. RD is also preferable for risk-averse investors who cannot tolerate portfolio fluctuations, and for those in high tax brackets where TDS management on RD is still more predictable than navigating capital gains on SIP redemptions.

Can I invest in both SIP and RD simultaneously?

Yes, and many investors do exactly that. A common strategy is to maintain an RD for short-term and emergency goals (1–2 years' corpus) while running a SIP for long-term wealth creation (5+ years). This separates your liquid, risk-free money from your growth capital. Use our [Recurring Deposit Calculator](/recurring-deposit-calculator/) to plan the RD piece and our [SIP Calculator](/sip-calculator/) for the SIP allocation.

How do I calculate RD maturity manually in India?

Use the quarterly compounding formula for each of the n instalments: Maturity = Σ P × (1 + r/4)^(4 × remaining months/12) for each instalment from 1 to n. For a ₹5,000 RD at 7.1% p.a. for 5 years (60 instalments), the first instalment compounds for 5 years and the last for 1/12 of a year. The sum of all these future values gives the total RD maturity amount of approximately ₹3.57 lakh.

What SIP return rate should I use to compare fairly with my RD?

For a conservative comparison, use 10% p.a. for a diversified equity mutual fund SIP. For a moderate comparison, 12% p.a. is commonly used based on historical NIFTY 50 long-term averages. For hybrid or balanced advantage funds, 9–10% is appropriate. Avoid using very high rates (15%+) for planning purposes — they reflect exceptional years, not sustainable averages. Always compare against the real RD rate your bank currently offers.

What is the SIP Advantage output in this calculator?

SIP Advantage is the difference between the SIP Corpus and the RD Corpus — it tells you in absolute rupees how much more your SIP would earn compared to an RD over the same period at the rates you entered. A large SIP Advantage (e.g. ₹5 lakh over 10 years) makes the case for accepting market risk via SIP clear. A small SIP Advantage over shorter periods explains why many investors prefer the certainty of an RD for near-term goals.