Over 10 years, ₹10,000 a month in a recurring deposit (RD) grows to about ₹17 lakh; the same amount in an equity SIP, at an assumed 12%, could reach about ₹23 lakh. But the SIP can also fall short, so the right answer depends on when you need the money.
You put in ₹12 lakh in total (₹10,000 × 120 months). What it becomes depends on the assumed return:
| Where it goes | Assumed return | Value after 10 years |
|---|---|---|
| Recurring deposit | ~6.5% | ~₹16.8 lakh |
| Debt-oriented option | ~7% | ~₹17.3 lakh |
| Equity SIP | ~11% | ~₹21.7 lakh |
| Equity SIP | ~12% | ~₹23.0 lakh |
These are assumptions, not promises. Equity returns are historically around 11–12% over long periods, but any single year can be sharply negative. RD rates move with the bank and the year.
RD interest is added to your income and taxed at your slab rate, every year, even before maturity. For someone in the 30% slab, a 6.5% RD is closer to 4.5% after tax, which is below a ~6% inflation assumption. Your money grows on paper but loses buying power.
Equity mutual fund gains are taxed only when you sell, and under current rules at a lower rate than slab income — confirm the year's rates, or check with a CA.
Use time as the filter:
The mistake is not choosing RD or SIP. It is using an RD for a 20-year goal, or an equity SIP for a goal due in 18 months.
You do not have to pick one for life. Give each goal its own SIP and match the vehicle to its deadline. Equity-heavy for far goals, then gradually shifting to debt and gold as the date nears (a glide path). That is how a 6-step goal plan works in Plan Our Future: one separate SIP per goal, de-risking automatically as each goal comes closer.
Keep your emergency fund outside all of this, in a safe and liquid place, so you never have to break a long-term SIP for a surprise bill.
Q. Is a SIP safer than a recurring deposit?
A. No. An RD has a fixed, bank-declared rate, so its value is predictable. A SIP in equity is not; it can lose value in the short term. Over long periods it has historically beaten deposits, but that is not guaranteed.
Q. Can I run an RD and a SIP together?
A. Yes, and many people should. Use the RD for goals under 3 years and the SIP for goals beyond 7 years.
Q. Is RD interest taxable?
A. Yes, under current rules it is taxed at your slab rate, and banks may deduct TDS above certain limits. Confirm the year's limits or check with a CA.
Q. What if the market falls right after I start a SIP?
A. For a long goal, falling prices mean your monthly amount buys more units. Stopping is usually the costlier choice, as long as the goal is still many years away.
Plan Our Future · AMFI-registered Mutual Fund Distributor (ARN-360754). Mutual Fund investments are subject to market risks, read all scheme related documents carefully.