Mutual fund SIPs, fixed or recurring deposits, and the Public Provident Fund are the three most popular ways Indians save every month. Each suits a different goal. Here's how they compare when you invest ₹10,000 a month for 15 years (₹18,00,000 in total).
| Option | Assumed return | Value after 15 years | Gain |
|---|---|---|---|
| Equity mutual fund SIP | 12% p.a. (not guaranteed) | ₹50,45,760 | ₹32,45,760 |
| Equity SIP — more cautious estimate | 10% p.a. | ₹41,79,243 | ₹23,79,243 |
| PPF (₹1.2 lakh a year) | 7.1% p.a. | ₹32,54,567 | ₹14,54,567 |
| Bank recurring deposit | 7% p.a. | ₹31,76,822 | ₹13,76,822 |
Returns are illustrative. Equity returns vary year to year and are not guaranteed; PPF and deposit rates are set periodically and can change.
Mutual fund SIP
- Best for: long-term goals (7+ years) such as retirement or a child's education.
- Risk: market-linked. Values can fall sharply in the short term.
- Tax: equity fund gains above ₹1.25 lakh a year are taxed at 12.5% if held over a year.
- Liquidity: high (except ELSS, which has a 3-year lock-in).
PPF
- Best for: safe, tax-free long-term savings.
- Risk: government-backed — practically none.
- Tax: interest and maturity are tax-free; deposits qualify for 80C (old regime).
- Liquidity: low — 15-year lock-in, with partial withdrawals from year 7.
Fixed and recurring deposits
- Best for: short-term goals (1–3 years) and your emergency fund.
- Risk: very low; deposits up to ₹5 lakh per bank are insured by DICGC.
- Tax: interest is fully taxable at your slab rate, which reduces real returns.
- Liquidity: good; premature withdrawal usually carries a small penalty.
So which should you choose?
Most people benefit from a mix: an FD or liquid fund for emergencies, PPF for a safe tax-free base, and equity SIPs for long-term growth. The longer your horizon, the more equity can make sense.
Run your own numbers: SIP calculator · PPF calculator · FD calculator · RD calculator.