FD VS SIP: FD of ₹ 10 lakh or SIP of ₹ 5 thousand, who will make you a millionaire first? – FD vs Sip which option makes you Crorepati Faster Check Calculation

Fd vs sip: If we talk about investing savings money, then people often have options … Fixed Deposit (FD) or Systematic Investment Plan (SIP). Those who have a small amount, invest money in fixed deposits. At the same time, those who have regular savings habit choose options like SIP.

But the real question is, if the target is Rs 1 crore, then which strategy will deliver there first. ₹ 10 lakh FD or SIP of ₹ 5,000 every month? Let’s understand its complete calculation.

Fixed Deposit: What is, and its benefits and loss

FD is one of the fixed deposits, traditional and safe investment mediums. In this, you deposit a lump sum amount and the bank gives you a fixed return according to a fixed interest rate. The FD period is already determined and its interest rate is not affected by market fluctuations.

It has some special benefits. As if your money is safe and the interest rate is already fixed. There is no risk of stock market fluctuations. Senior citizens also get the benefit of additional interest rate. If we talk about negative points, the return in FD is limited, on an average up to 6-7%. It often fails to beat inflation. Then tax liability is also made on interest. Growth is very slow in its long periods.

How long will FD be formed in 1 crore?

Now suppose that you have deposited ₹ 10 lakh in FD and the interest rate is 7% annually. Let us see how many years this amount will be ₹ 1 crore with compounding at this rate.

This means that it takes about 33.5 years for FD worth ₹ 10 lakh to become ₹ 1 crore. That too when there is no tax on interest and no withdrawal is done throughout the period.

SIP: Low investment, but more likely

SIP is a systematic investment plan, an investment model. In this, you invest a fixed amount in mutual funds every month. This amount can range from ₹ 100 to thousands. This scheme is connected to the stock market, so it fluctuates. However, in the long run, equity -based SIP has been successful in giving average better returns.

If you talk about the benefits of SIP, then start with small investment is possible. The effect of compounding is more visible in this. There is no problem of lock-in period like FD. It can be started or closed anytime. Long -term capital gains provide some tax relief. At the same time, if you talk about risk, SIP with equity mutual fund scheme is completely dependent on market fluctuations. Also, there is no guarantee of fixed returns. You have to invest with discipline and patience.

In what time will ₹ 1 crore be made from SIP of ₹ 5000?

SIP has a average long -term return of 12% annual returns. Now suppose you do SIP of ₹ 5,000 every month and on an average 12% annual returns are being received. It is mentioned below how much time it will take to become ₹ 1 crore at this pace:

This means that with a monthly SIP of ₹ 5,000, you can reach a mark of Rs 1 crore in about 29 years, that too without paying a lump sum. At the same time, if you continue the SIP of 5000 SIP for 33.5 years like FD, then your total return will be ₹ 2.71 crore with the power of compounding. At the same time, during this period, only Rs 1 crore will be made a FD of Rs 10 lakh.

FD vs SIP: Which option is better?

The answer to this question depends entirely on your convenience. According to experts, if your purpose is only the security of capital and you cannot withstand the market fluctuations, then FD is a better option. But to reach Rs 1 crore, it has to be maintained for 33.5 years, which is a long and slow process. Also, it is not practical to keep FD for such a long period for such a long period.

On the other hand, SIP starts with low capital, but makes a target of Rs 1 crore in 29 years with discipline and patience. There is also scope for better returns in it. For example, some mutual fund schemes can also return from 15% to 20%. However, the risk is also high in them.

If you get 15% annual return on your 5000 SIP, then you will make a fund of 1 crore in 21 years and 4 months. That is, about 12 years before FD.

Also read: Retirement Planning: How much fund is needed for retirement, where to invest money? Know the expert

Disclaimer: Here information provided is being given only for information. It is necessary to mention here that the investment market in the market is subject to risks. Always consult experts before investing money as an investor. There is never advice to anyone to invest money on behalf of Moneycontrol.