Table of Contents
Introduction:
Investing in 2026 has become more important than ever, given the inflation expected in 2026. Bank interest rates are changing.
And the biggest issue among people is where to invest their money, and which is the safest.
People are also confused about whether to invest their money in SIPs or Funds.
If you’re also wondering which one to invest your money in?
Which one carries the highest risk, and which one offers the best returns?
Which one will be better in the long term?
How much money can an investment of ₹1000 per month generate?
So this article is for you. In it, I’ll explain how to invest a small amount.
In this article, I will explain every detail SIP vs FD 2026: Complete & Smart Comparison with Real Example.
Even today, most people in India invest money using old traditional methods, and either they lack knowledge or are afraid to invest.
In this article, we’ll explain the SIP vs FD 2026: Complete & Smart Comparison with Real Example so you can invest easily without any risk.
Most people in India consider fixed deposits to be safe, while some younger generations consider SIPs to be the best. They are investing in mutual funds through SIPs, which are market-linked and offer higher returns, with greater growth potential in the long term.
What’s the truth?
Is SIP really better than a fund, or is guaranteed return the best option?
In this article, SIP vs. FD 2026 Comparison with Real Examples, we’ll understand the details.
Let’s begin.
What is SIP?
SIP is a systematic investment plan (SIP) in mutual funds, in which we make a fixed deposit every month.
Example:
Invest ₹1000 every month
And continue for 5 years.
So we get returns based on market performance. We don’t get any fixed amount in it.
Most people make SIPs in equity mutual funds, where they match market performance and performance also depends on market performance.
What is FD?
Example:
If you invest ₹1,00,000 in a fund for one year and earn a 7% interest rate, you will receive a fixed return on maturity. There is no risk involved.
State Bank of India, HDFC Bank, ICICI Bank all offer 6%-7.5% interest on fixed deposits. This is the average range prevailing in 2026.
SIP vs FD – Basic Comparison Table (2026):
| Feature | SIP | FD |
| Flexibility | Slightly High | Slightly Limited |
| Average Return | 10%–15% | 6%–7.5% |
| Risk Medium | Medium to High | very Low |
| Return Type | Dependent Market | fixed |
| Liquidity | Moderate | Depends on tenure(According to Bank) |
| Taxation | Capital Gains Tax | Interest taxable |
Let’s take a real example to help you understand.
Case:
Monthly Investment: ₹1,000
Duration: 5 Years
Option 1: SIP
₹1,000 per month × 60 months = ₹6,00,00 total investment
Assume average return: 11% annually
Estimated maturity value ≈ ₹80,000 – ₹81,000
Profit ≈₹20,000 – ₹21,000
Option 2: FD
₹60,000 FD
Interest rate: 7% annually
5 years compound interest
Maturity value ≈₹84,156
Profit ≈₹24,156
| Investment Type | Investment | Total Invested | Return Rate | Maturity Value | Total Profit |
| SIP | ₹1,000 Monthly | ₹60,000 | 11% | ₹80,000 | ₹20,000 |
| FD | Lump Sum ₹60,000 | ₹60,000 | 7% | ₹84,156 | ₹24,156 |
Difference?
- If we look at SIPs, if they give 11% returns, then SIPs are not better.
- If the market is better, SIPs will be better than FD.
- In this case, FD are better than SIPs because if the market goes down, SIPs give lower returns.
Advantages of SIP (2026 ):
Some of the advantages of SIPs are explained in this SIP vs FD 2026 Comparison with Real Example article, which are as follows-
- If we look at SIPs in the long term, we get the highest returns, and if we look at them in the short term, we get lower returns.
- SIPs can give average returns of 12 to 15% depending on the market.
- This is achieved when the market is high.
- We can start SIPs with small amounts.
- You don’t need a large amount to start them.
- Anyone can start with a small amount.
- This SIP can beat inflation.
- SIPs offer higher returns than fixed deposits if invested in the long term.
You can easily invest in banks by reading this article, SIP vs FD 2026 Comparison with Real Example.
Disadvantages of SIP:
Investing money in SIPs involves some risk because the returns depend on the market. If the market is high, the returns are high. If there is market risk, the returns are low.
If we invest money in SIPs for the short term, there is a possibility of loss because it depends on the market.
SIPs do not offer guaranteed returns. SIPs are a system of investing in mutual funds that depend on the market.
Advantages of FD:
- With a fixed deposit, the customer receives a guaranteed return based on the interest rate pre-fixed by the bank.
- Returns are received at the interest rate locked in by the bank.
- Risk is almost zero in a reputable bank.
- Capital safety is built into the fixed deposit model, as reputable banks often have strict policies.
- Senior citizens receive additional interest.
- Fixed deposit investments don’t require market knowledge. It’s a simple product; anyone can invest in it, as it requires a lot of knowledge.
You can easily invest in banks using this article, SIP vs FD 2026 Comparison with Real Examples.
Disadvantages of FD:
- It offers lower returns than SIPs because the interest rate is fixed.
- Fixed deposits will be more difficult to beat inflation than SIPs.
- The interest rate earned in this is fully taxable.
FD and SIP Tax Comparison 2026:
SIP Taxation:
If you hold your SIP investment for more than one year, you are subject to Long Term Capital Gains Tax (LTCG).
Up to ₹1 lakh in this investment is tax-free, and tax is deducted thereafter.
10% is charged above that.
FD Taxation:
The entire interest earned in this is fully taxable.
If your investment amount is high and you are in the 30% tax bracket, the returns are even lower.
Best Investment?
SIP is Best If:
In this article, SIP vs FD 2026 Comparison with Real Example, we will explain which investment is best for whom-
- If you are looking for long-term investments, then SIP is best for you.
- If you can tolerate risk, then SIP is best because SIP depends on the market.
- If you want to create wealth and your future is in the age group of 20 to 45, then
FD is Best If:
In this article, SIP vs FD 2026 Comparison with Real Example, we will explain which investment is best for whom-
- If you want guaranteed returns, then fixed deposits are best for you.
- If you are making short-term investments, then this is best.
- If you are risk-averse, then this is best for you.
Inflation Effect:
- Average inflation in India hovers around 5 to 6%.
- If your fixed deposit is offering 6.5% and market inflation is 6%, your real return is almost zero.
- But if your SIP is offering 12%, your real return will be around 6% after adjusting for inflation.
- Easier if you are investing in SIP for the long term, it will be powerful for wealth creation.
- If you invest some amount in both, it will be a balanced approach, which is what smart investors do.
2.Best SIP plans for 1000 per month:
Above in this article, SIP vs FD 2026 Comparison with Real Example, I have mentioned some points that can be started with a small amount.
Starting a SIP with a small amount is a smart start. The power of compounding in SIPs can help even a small amount grow into a substantial corpus if invested for the long term.
Starting a small SIP with ₹1,000 will yield substantial returns in the long term. Therefore, we should start with a small amount and gradually increase our investment as we gain market knowledge.
3.Which is better mutual fund SIP or FD?
- In India, mutual funds (SIP) and fixed deposits are both very popular investment options. Everyone is investing in one or the other. In the article above, we can read the advantages and disadvantages of SIP and FD (SIP vs FD 2026 Comparison with Real Example), and based on that, you can choose which one to invest in.
- Which one is better for you depends on your long-term focus and risk tolerance.
- While fixed deposits offer a safe and guaranteed return with low risk, they offer zero risk. However, they cannot beat inflation because their interest rates are lower than those of SIPs.
- Fixed deposits offer a low risk and guaranteed return option, while SIPs offer high risk and high returns, thus beating inflation.
- If you want to invest in the short term, then fixed deposits are a better option.
- If you want to invest in the long term, then SIPs are a better option. Simply put, fixed deposits keep your money safe, while SIPs grow it.
4.Is mutual fund better than SIP?
- This question is a bit confusing because SIP and mutual funds are the same thing.
- Mutual funds are an investment model, whereas SIP (Systematic Investment Plan) is a way to invest in mutual funds. You can invest the entire amount at once, or you can deposit small amounts monthly.
- If you have a small amount, you can deposit monthly; if you have a large amount, you can deposit all at once. This offers both types of facilities. The above article, SIP vs FD 2026 Comparison with Real Example, explains the differences between the two in detail. Please read it properly.
5.Is SIP 100% safe?
- SIP is not 100% safe, as clearly explained in the above article, SIP vs FD 2026 Comparison with Real Example.
- Since SIP is a method of investing in mutual funds that depends on the market, the risk in SIP is also very high.
- If the market falls, the return decreases because SIP depends on the market, hence it is not 100% safe.
- If you want to invest long term, the risk of SIP is reduced.
- Because you get the benefit of compounding in the long term. SIP has risk, but the growth is higher in the long term.
5.Can I withdraw SIP anytime?
- You can withdraw the money at any time, but this depends on the mutual fund you choose. If you choose an open-ended mutual fund, you can redeem the units at any time, and the money will be credited to your account within one to three working days.
- If your fund is locked-in, you cannot withdraw before that date.
- Short-term withdrawals may be taxable.
6.How much is 1 lakh in SIP?
- SIP is an investment method and not a fixed-return scheme, so it’s important to understand this. If you invest ₹100,000 in total, you can divide it into monthly SIPs.
- Returns will depend on the fund’s term.
- The future value of ₹100,000 in a SIP depends on time and return value.
Conclusion:
Short-term investment is safe only with fixed deposits.
Long-term monthly investment is best with SIPs.
The above article, SIP vs FD 2026 Comparison with Real Example, explains the details of fixed deposits and SIPs.