Fixed Deposit vs SIP - Which is Better

Fixed Deposits provide safety with fixed interest, while SIPs allow regular investments. Compare SIP vs Fixed Deposit to determine the best financial option.
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3 mins
31-May-2025

When it comes to choosing between Fixed Deposits (FDs) and Systematic Investment Plans (SIPs), many investors find themselves at a crossroads. Both offer unique advantages—but which one aligns better with your financial goals, risk tolerance, and investment style?

Let’s simplify the FD vs SIP debate for you.

FD vs SIP: Key differences at a glance

Particular

Fixed Deposit (FD)

Systematic Investment Plan (SIP)

Investment type

One-time lump sum

Fixed amount at regular intervals

Returns

Fixed, guaranteed rate

Market-linked, may vary

Risk level

Very low to no risk

Moderate to high risk, depending on the fund

Liquidity

Lower—penalty on premature withdrawal

Higher—can redeem units anytime

Ideal for

Short-term and low-risk goals

Long-term wealth creation with higher risk tolerance

 

Not Sure Where to Begin? Start your investment journey with a Bajaj Finance FD. It is simple, safe, and designed for steady growth. Open FD.

What is a Fixed Deposit (FD)?

A Fixed Deposit is a traditional, low-risk investment that offers fixed returns over a specific tenure. You invest a lump sum amount, lock it in for a selected duration, and earn guaranteed interest.

FDs are ideal for conservative investors who prioritise capital preservation and predictable earnings. They are not impacted by market fluctuations, making them a stable choice in uncertain times.

Why choose Bajaj Finance FD?

  • Stable and Secure Returns: Rated [ICRA AAA (Stable)] and [CRISIL AAA/Stable], Bajaj Finance FDs are among the safest investment options in the market.

  • Attractive Interest Rates: Earn up to 7.30% as a senior citizen, and up to 6.95% p.a. if you’re under 60.

  • Flexible Payout Options: Choose between cumulative and non-cumulative payouts to match your cash flow needs.

  • Loan Against FD: Need funds urgently? Get a loan up to 75% of your FD value without breaking your investment.

Grow Wealth Without Risk! Looking for safe, predictable returns? Bajaj Finance Fixed Deposit helps your money grow securely with zero market risk. Open FD Account and get up to 7.30% p.a. returns.

Fixed Deposit

  1. Trusted by over 5 lakh customers
  2. Fixed Deposits worth more than Rs. 50,000 crore booked
  3. Rated CRISIL AAA/STABLE and [ICRA]AAA(STABLE)
  4. Up to 0.35% p.a. extra interest offered for senior citizens
  5. Flexible interest payout options available - Monthly, Quarterly, Half-yearly, Annually or at Maturity

By proceeding, you agree to our Terms and Conditions

What is a Systematic Investment Plan (SIP)?

SIP is a method of investing in mutual funds in smaller amounts at regular intervals—typically monthly. Instead of investing a large sum at once, you gradually build your investment portfolio over time.

SIPs are designed for long-term wealth creation and work well for those who can tolerate market fluctuations.

Benefits of SIP:

  • Disciplined Investing: Encourages regular saving habits that build long-term wealth.

  • Market Volatility Shield: Rupee cost averaging helps reduce the impact of market ups and downs.

  • Compounding Advantage: The earlier you start, the more you gain from compounding.

  • Flexible and Easy: Start, pause, or stop your SIP anytime based on your financial situation.

Want Guaranteed Returns?

If the ups and downs of SIPs worry you, switch to an FD. Bajaj Finance FD offers assured returns of up to 7.30% p.a. with zero volatility. Check FD Rates.

Pro tip

Bajaj Finance offers attractive Fixed Deposit interest rates of up to 6.95% p.a. for non-senior citizens, and up to 7.30% p.a. for senior citizens, inclusive of an additional rate benefit of up to 0.35% p.a.

systematic-deposit-plan-pro-tip-banner

SIP vs FD – Which one should you choose?

 Here’s a quick way to decide:

  • Choose FD if:

    • You have a lump sum to invest.

    • You want guaranteed, fixed returns.

    • You’re looking for short- to medium-term goals with minimal risk.

  • Choose SIP if:

    • You want to build wealth gradually.

    • You can handle short-term risks for long-term gains.

    • You aim to invest for goals like retirement or child’s education.

Both investments can co-exist in a diversified portfolio. Use FDs for stability and SIPs for growth.

Safe Investment Starts Here! Skip the stress of market swings. Open a Bajaj Finance FD today and lock in high returns of up to 7.30% p.a. for the future. Check Eligibility.

Fixed deposit variants

Highest Credit Ratings | Trusted with over 1.4 million Deposits | Assured Returns on FD
Recommended

Fixed Deposit - 60 Months

INTEREST RATES UP TO
7.30% p.a.
Invest Online

Fixed Deposit - Senior Citizen

INTEREST RATES UP TO
7.30% p.a.
Invest Online

Fixed Deposit - Age below 60

INTEREST RATES UP TO
6.95% p.a.
Open FD

Fixed Deposit - Minor

INTEREST RATES UP TO
6.95% p.a.
Open FD

Fixed Deposit - HUF

INTEREST RATES UP TO
6.95% p.a.
Open FD

Fixed Deposit - Sole Proprietor

INTEREST RATES UP TO
6.95% p.a.
Open FD

Conclusion

In the FD vs SIP conversation, there’s no one-size-fits-all answer. SIPs offer the potential for higher returns but come with market risks. FDs offer stability and fixed income, perfect for conservative investors.

If your goal is to earn guaranteed returns without worrying about market movements, a Bajaj Finance FD could be your perfect fit. With attractive rates and top-tier safety, it’s a smart choice to grow your money the steady way.

Plan with Confidence! Use our FD calculator to check how much you’ll earn—before you invest. Check FD Rates.

Calculate your expected investment returns with the help of our investment calculators
 

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Conclusion

The choice between FDs and SIPs depends on your individual financial goals and risk tolerance.

FDs are suitable for those seeking stability and guaranteed returns, while SIPs offer the potential for higher growth over the long term, albeit with inherent market risks.

Ultimately, the best investment option depends on your individual circumstances and investment objectives.

Frequently asked questions

Is it safe to invest through SIPs?

Yes, investing through SIPs is very safe. You must make sure to go through a reputed financier that helps invest in these mutual fund schemes and conducts research before investing. Bajaj Finance offers mutual fund facilities where you can choose from 900+ options.

Are investments done via SIP tax-free?

No, SIP investments are taxable.

Is SIP better than FD?

Both tools have their own merits and advantages. However, to choose which one suits your requirements best you must be clear about your goals, risk appetite, income, and investment horizon to make a well-informed decision.

Can I cancel my SIP anytime?

Yes, SIPs can be paused or even cancelled anytime.

Can I withdraw my investment via SIP anytime?

Withdrawal from your SIP investment anytime is easy. However, it is best to check premature withdrawal penalties that some providers might charge before making a move.

Is SIP safe than FD?

No, SIPs are generally considered less safe than FDs. FDs offer guaranteed returns with minimal risk, while SIPs, particularly those invested in equity funds, are subject to market fluctuations and carry the potential for capital loss.

Is SIP better than FD?

The best choice between FDs and SIPs depends on your individual circumstances. Consider your financial goals, risk tolerance, income, and investment horizon to make an informed decision.

  • SIPs offer potential for higher long-term growth but involve market risk.
  • FDs provide guaranteed returns with lower risk but typically yield lower returns over the long term compared to equity investments.

Why is a Bajaj Finance FD a good alternative to SIPs?

Bajaj Finance FD offers fixed, guaranteed returns without the unpredictability of the market. It’s a great option if you prefer stability over risk. Start with just Rs. 15,000 and Open an FD with Bajaj Finance today.

Does SIP give better returns?

Systematic Investment Plans (SIP) in mutual funds have the potential to deliver higher returns compared to traditional fixed-income instruments like FDs. Since SIPs invest in market-linked securities, they benefit from compounding and rupee cost averaging. However, returns are subject to market fluctuations, and long-term investments generally yield better results.

Is it better to invest in SIP or FD?

The choice between SIP and FD depends on your financial goals and risk tolerance. FDs offer fixed, guaranteed returns, making them ideal for conservative investors. SIPs provide higher growth potential but come with market risks. If stability is a priority, FDs are better; if long-term wealth creation is the goal, SIPs may be more suitable.

Which option is better for senior citizens: SIP or FD?

Senior citizens FDs are generally a safer choice as they provide guaranteed returns and capital protection. SIPs may offer higher returns but involve market risk, which may not suit retirees seeking financial security. However, those with a higher risk appetite can allocate a portion to SIPs for potential long-term growth while keeping FDs for stability.

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Disclaimer

As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer https://www.bajajfinserv.in/fixed-deposit-archives
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.