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With SIPs, you can increase your investment whenever you feel like it, but traditionally RDs don’t offer that flexibility. However, flexi RDs are now available, allowing investors to increase their monthly contributions.
The types of investment available with SIPs are quite diverse, unlike RDs. Investors can choose to start an SIP in equity, hybrid or debt mutual funds, while RDs in post offices or banks offer a fixed interest rate. But if you want to invest Rs 10,000 monthly for a long term such as 10, 15 or 20 years, which option, SIP or RD,- will help you build a bigger corpus?
Where can you create a bigger corpus in the long term, SIP or RD?
While an RD provides a fixed interest rate, SIP returns may vary depending on the kind of fund you choose. Even if you invest in debt mutual funds, returns can be different depending on the fund.
For example, a liquid fund may provide you lower return but higher safety and liquidity. A credit risk fund may provide you higher return than liquid fund but is riskier. So, while we will calculate RD return with a fixed interest rate, we will calculate corpus created from SIP at different return rates.
Since we are talking about a long term, we will calculate the corpus created from SIP and RD in 10, 15 and 20 years. Our investment amount in all cases will be Rs 10,000 a month.
Corpus from Rs 10,000 monthly investment in RDs in 10, 15 and 20 years
As RDs have maximum tenure of 10 years we need to customise our strategy to suit for longer tenure. While investing for the 15-year-period, we will take out the RD maturity amount after 10 years and invest it in a fixed deposit (FD) scheme for the next five years. Simultaneously, we will also start another RD for five years where we will invest Rs 10,000 every month.
While investing for 20 years, once RD matures after 10 years we will invest it in FD for next 10 years and open a new RD of Rs 10,000 each month for next 10 years.
Corpus from Rs 10,000 monthly SIP investment in 10, 15 and 20 years
The corpus you can create from your SIP investment will depend on the return and the risk you are willing to take. For example, if you invest in a debt fund where annualised returns are 6%-7% at lower risk. Depending upon the longevity of investment you can create from Rs 17.20 lakh- Rs 51 lakh corpus in 10 to 20 years.
But if you opt for a hybrid fund, which carry relatively higher risk than debt funds but give you higher returns, and typically get 8%-10% annualised returns in the long term. Depending upon the length of your investment, you can create corpuses in the range of Rs 18.12 lakh to Rs 57.26 lakh in 10 to 20 years.
However, if your investment horizon is long term, you may also opt for an equity fund. Such funds may not be ideal in the short to medium term due to market unpredictability, but in the long run, they can produce good returns.
The large cap mutual fund category, which is considered one of the safest funds among all equity funds, has delivered 12.77% annualised return in the last 10 years. Nippon India Large Cap fund has delivered a 16.24% CAGR in the last decade. Though past returns don’t guarantee future returns, for reference purposes, we can assume they will deliver similar returns in the future.
If we assume 10%-13% annualised return from equity funds, corpuses created in 10 years will be in the Rs 16.32 lakh to Rs 22.63 lakh range, while in 20 years, it will be in the Rs 45 lakh to Rs 1.03 crore range..
Corpus in 10 years with Rs 10,000 SIP (at 6%-13% return)
| SIP amount | Rate of return | Years | Corpus |
| ₹ 10,000 | 6% | 10 | ₹ 16,32,643 |
| ₹ 10,000 | 7% | 10 | ₹ 17,20,189 |
| ₹ 10,000 | 8% | 10 | ₹ 18,12,832 |
| ₹ 10,000 | 9% | 10 | ₹ 19,10,860 |
| ₹ 10,000 | 10% | 10 | ₹ 20,14,576 |
| ₹ 10,000 | 11% | 10 | ₹ 21,24,297 |
| ₹ 10,000 | 12% | 10 | ₹ 22,40,359 |
| ₹ 10,000 | 13% | 10 | ₹ 23,63,111 |
Corpus in 15 years with Rs 10,000 SIP (at 6%-13% return)
| SIP amount | Rate of return | Years | Corpus |
| ₹ 10,000 | 6% | 15 | ₹ 28,83,085 |
| ₹ 10,000 | 7% | 15 | ₹ 31,28,638 |
| ₹ 10,000 | 8% | 15 | ₹ 33,97,785 |
| ₹ 10,000 | 9% | 15 | ₹ 36,92,810 |
| ₹ 10,000 | 10% | 15 | ₹ 40,16,212 |
| ₹ 10,000 | 11% | 15 | ₹ 43,70,720 |
| ₹ 10,000 | 12% | 15 | ₹ 47,59,314 |
| ₹ 10,000 | 13% | 15 | ₹ 51,85,248 |
Corpus in 20 years with Rs 10,000 SIP (at 6%-13% return)
| SIP amount | Rate of return | Years | Corpus |
| ₹ 10,000 | 6% | 20 | ₹ 45,56,458 |
| ₹ 10,000 | 7% | 20 | ₹ 51,04,061 |
| ₹ 10,000 | 8% | 20 | ₹ 57,26,600 |
| ₹ 10,000 | 9% | 20 | ₹ 64,34,561 |
| ₹ 10,000 | 10% | 20 | ₹ 72,39,867 |
| ₹ 10,000 | 11% | 20 | ₹ 81,56,072 |
| ₹ 10,000 | 12% | 20 | ₹ 91,98,574 |
| ₹ 10,000 | 13% | 20 | ₹ 1,03,84,852 |
Hence, if you compare returns from an RD and SIP, SIPs may help one create a larger corpus, but returns may fluctuate heavily during market downturns. On the other hand, an RD has minimal risk and delivers predictable returns. One knows the amount they will get on maturity and it may cover the debt allocation of an investor.
How can one invest in an RD?
A person can open an individual or a joint RD account in a post office or a bank. It is a fixed interest rate scheme where an investor can start a monthly investment with a minimum amount of Rs 100. Some banks offer a Rs 500 as the minimum amount. The duration of an RD can be 1 to 10 years, while a post office offers a five-year RD. The post office offers an interest rate of 6.8% in its RD, while the rate may vary in banks depending on the tenure.
The monthly deposit amounts are the same from the beginning for an RD investment. Some banks also offer flexi RDs where one can change the monthly investment amount.
Investors get the principal and interest back on an RD’s maturity, but the RD account pre-closure facility is also available at post office and banks.
An investor can make advance deposits in an RD and can also take a loan against it.
How can one invest in an SIP?
An investor can invest in an SIP through a mutual fund house website or app or through online investment platforms. An SIP can be a fixed amount, or you can choose a step-up SIP where you can increase the amount periodically.
An SIP can be daily, weekly, monthly, biannually or yearly, but monthly SIP is the most popular offered by most of the investing platforms.
For whom is SIP the best route for financial planning? Young earners, retirees or goal-based investors?
Swapnil Aggarwal, director, VSRK Capital, says for young earners and long-term investors, SIPs in equity funds are a more suitable route.
“They offer superior return potential over time and are more tax-efficient compared to FDs. Given current market conditions and long-term wealth creation goals, SIPs are better aligned for investors who can stay invested through market cycles,” says Aggarwal.
Rohan Goyal, investment research analyst, MIRA Money, says everyone with a time horizon beyond five years should invest in SIP.
“A 25-year-old investing Rs 10,000 per month in a diversified equity fund for 30 years at a 12% CAGR accumulates roughly Rs 3.5 crore. For goal-based investors saving for retirement or a child's higher education 15-20 years away, SIPs in equity funds are practically the only instrument that can beat India's structural inflation. Even a conservative retiree with pension income covering daily expenses should consider allocating a small percentage to balanced advantage or hybrid funds via SIP,” says Goyal.
Vinayak Magotra, product head, founding team, Centricity WealthTech, too says SIPs are well suited for young earners, long-term goal-based investors, and even retirees who have surplus funds and can tolerate some market volatility.
“For young investors, SIPs help build financial discipline and allow participation in compounding over long horizons. Retirees can also use SIPs selectively for the growth component of their portfolio to help counter inflation,” says Magotra.
When comparing a Systematic Investment Plan (SIP) in mutual funds versus a Recurring Deposit (RD) in a bank, the primary difference lies in the nature of returns: RDs offer guaranteed but lower returns, while SIPs offer market-linked growth that typically outperforms inflation over the long term.
With an investment of ₹10,000 per month, here is how your wealth would likely compare over 10, 15, and 20 years.
Wealth Comparison: SIP vs. RD
Assumptions: RD at 7% p.a. (Current average for major banks in 2026); SIP at 12% p.a. (Historical average for diversified equity funds).
| Tenure | Total Invested | RD Maturity (7%) | SIP Maturity (12%) | Difference (Wealth Gap) |
| 10 Years | ₹12 Lakh | ~₹17.4 Lakh | ~₹23.2 Lakh | +₹5.8 Lakh |
| 15 Years | ₹18 Lakh | ~₹32.1 Lakh | ~₹50.4 Lakh | +₹18.3 Lakh |
| 20 Years | ₹24 Lakh | ~₹52.4 Lakh | ~₹1 Crore | +₹47.6 Lakh |
Key Insights for Your Decision
1. The Power of Compounding (SIP)
As shown in the 20-year bracket, the SIP corpus grows to nearly double that of the RD. This is because equity markets tend to provide a "compounding kicker" after the 12th year, where the interest earned starts growing faster than the principal you contribute.
2. Taxation Matters
RD Interest: Taxed as per your Income Tax Slab. If you are in the 20% or 30% bracket, your "real" return drops to about 5–5.5%.
SIP (Equity): Long-Term Capital Gains (LTCG) tax is applied only when you withdraw. Currently, gains up to ₹1.25 lakh per year are tax-exempt, and anything above that is taxed at a flat 12.5%.
3. Risk vs. Safety
Choose RD if: You need the money for a specific goal in exactly 10 years and cannot afford even a 5% market dip at that time. It is "safe" but rarely beats inflation significantly.
Choose SIP if: You are looking to build long-term wealth or a retirement fund. Over 10–20 years, the risk of negative returns in a diversified equity SIP is historically very low.
Recommendation
If you have a 10+ year horizon, a SIP is significantly more effective for wealth creation.
Would you like me to calculate the results for a specific mutual fund category, like Mid-cap or Small-cap, which might offer higher (though more volatile) returns?
We will take a 6.05% interest rate for all our calculations since this is the rate offered by State Bank of India in its 5-10 year RD and FD.
| Particulars | Value |
| Monthly investment in RD | ₹ 10,000 |
| Rate of return | 6.05% |
| Investment period | 10 years |
| Corpus | ₹ 16,48,781 |
Corpus from Rs 10,000 monthly RD investment in 15 years (at 6.05% return)
| Particulars | Value |
| FD investment | ₹ 16,48,781 |
| FD maturity | ₹ 22,26,145 |
| RD investment | ₹10,000/month |
| RD maturity | ₹ 7,01,557 |
| Corpus in 15 years | ₹ 29,27,702 |
Corpus from Rs 10,000 monthly RD investment in 20 years (at 6.05% return)
| Particulars | Value |
| FD investment | ₹ 29,27,702 |
| FD maturity | ₹ 39,52,914 |
| RD investment | ₹10,000/month |
| RD maturity | ₹ 7,01,557 |
| Corpus in 20 years | ₹ 46,54,471 |
