What is FD(Fix Deposit) and SIP, Difference

FD and SIP, When it comes to investment, most people are confused about where to invest.  They also want that wherever the investment is done, they should be safe and the returns are also good.  If someone says make a FD(fixed deposit), if you are relaxed, then say SIP(Systematic Investment plan) in mutual funds, you will get good returns. However, there is no harm in both these options. FD(Fixed deposit) is a separate investment channel and SIP(Systematic Investment plan) is a different method in mutual funds.  So first of all, if there is any confusion in your mind, then remove it.

#SIP Meaning -Systematic Investment plan

#FD Meaning -Fixed deposit

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What is FD(Fixed Deposit)?

In Fixed Deposits, you put money in a bank or a company for a fixed time.  When its maturity becomes, you get money with interest.  Fixed deposits are considered to be a very simple and safe means of investment, which are usually opted out by the retired people, as their risk capacity is low in risk taking.  This is a good way of earning a fixed income for such people.  In this, according to your convenience and need, you can take the interest together later and also take it every month.

Why should you FD?

FD provide investors with a higher rate of interest than a regular savings account and also have many other advantages which make them a preferable option for investment. Investment in fixed deposits gives you an assured return. The returns are generally over and above the returns offered by a savings bank account

What is SIP(Systematic Investment Plan)?

Systematic Investment plan or SIP is a means of investment in mutual funds.  In this, according to your ability, you invest some money in mutual funds every month.  This is a target-set investment, like if someone wants to become a millionaire after 5 years, then how much money will he have to invest through SIP from today, it prepares and runs in advance.  Buying a house, buying a car, there are different SIP according to the goals of studies.  Its most special thing is that according to the risk capacity, you also choose the category.  If you have the ability to take more risk then choose equity funds, less risk capacity, debt funds and light risk potential, then choose hybrid funds.  

Why should you SIP?

One, it imparts financial discipline to your life. Two, it helps you to invest regularly without wrestling with market mood, index level, etc. For example, if you are supposed to put a fixed amount every month in a mutual fund scheme, you need to find time to do it. When you have the time, you might be worried about market conditions and think of postponing your investments. Or you might be thinking of investing more if the mood is optimistic. SIP puts an end to all these predicaments. The money is automatically invested regularly in a scheme without any effort on your part.

When you invest regularly over a period irrespective of the market conditions, you would get more units when the market is low and less units when the market is high. This averages out the purchase cost of your mutual fund units.

Therefore, you can decide which investment option to choose from FD or SIP, based on your risk capacity and goals.

Minimum Investment

Minimum Investment in FD(Fixed deposit):- The minimum investment in FD starts from Rs 1,000 to Rs 1 lakh.  Since this investment is lump sum, people do not have to deposit money every month.  Usually people choose FD only if they have a large lump sum and they want to keep it somewhere safe.

Minimum Investment in SIP(Systematic Investment Plan):-Any person can start investing in SIP from 500 rupees per month, so that the pocket is not burdened.  You can choose it on a quarterly basis instead of monthly.

Investment Duration

Investment Duration in FD(Fixed deposit):- Fixed deposit is a traditional investment tool, it can be thought of both short term and long term.  FD range from 7 days to 45 days, 1.5 years and also for a maximum of 10 years. 

Investment Duration in SIP(Systematic Investment Plan):- SIP is generally considered as a long-term investment, the longer the investment, the better the return.  

What will be the return?

 It is a matter of a hundred things, how much return is given in any investment?  One of the biggest differences between FD and SIP returns is that FD returns are fixed, but not SIP.

Return in FD(Fixed deposit):-  The fixed deposit rate is fixed for a fixed time, currently it is running between 5.5% and 7.75%.

Return in SIP(Systematic Investment Plan):-  SIP depends on the performance of the mutual fund and the movement of the stock market.  If the investment in mutual funds is continued for 5 years, then returns of up to 15% are also available.  Which is more than FD returns. 


Taxation is completely different in fixed deposits and mutual funds. Whatever interest you earn in a fixed deposit, tax will be deducted according to your tax slab.  Whereas in mutual funds, tax is levied on the basis of how long you have invested.

Here, if we talk only about equity mutual funds, then tax is done in this way.

Taxes in Equity Mutual Funds If you had invested in mutual fund units for more than 12 months, then long-term capital gains will be taxed at 10%, long-term capital gains up to Rs 1 lakh are not tax-free.  Keeping units for less than 12 months will attract 15% tax on short-term capital gains.

For More Details Visit- https://www.icicibank.com/Personal-Banking/account-deposit/fdxtra/fixed-deposit-invest.page

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2 thoughts on “What is FD(Fix Deposit) and SIP, Difference”

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