Both SIP and FD help you save, but they work very differently.
Fixed deposit
An FD gives a fixed rate for a fixed time. Your money is safe and the return is known in advance. The downside is that the return is usually lower, and the interest is taxed as per your slab.
SIP
A SIP invests a fixed amount every month in a mutual fund. Returns are not guaranteed and can go up or down, but over many years equity funds have often beaten FD rates.
Which one to choose
- Need the money in 1-2 years? An FD is safer.
- Saving for 5 years or more? A SIP can grow more, if you can handle the ups and downs.
- Many people use both.
Try the SIP Calculator and the FD Calculator with your own numbers to compare.