SIP vs FD - which is a better option for investment
Investing is a crucial part of growing wealth. This makes investing in the right tool even more vital. Two of the most preferred investment avenues in the country are the Fixed Deposit (FD) and Systematic Investment Plan (SIP). These are preferred because of their safe nature, high return rate and ease of investing. If you are confused about whether is SIP better than FD, this blog will clarify some concepts.
SIP vs FD – which is a better option for you?
SIP and FD both are highly preferred tools in the market if you are aiming to park your hard-earned money. These tools are great if you wish to achieve financial goals in a systematic and disciplined manner. These tools have their respective advantages and disadvantages. For you to select between SIP or FD, to understand which is better, a deep dive into both these tools is necessary. However, having a clear vision of your investment goal is also necessary to make an informed decision.
What is a Fixed Deposit - FD?
A Fixed Deposit is a widely invested-in tool that safely parks your funds for a fixed tenure at a fixed income rate. Banks, post offices and Non-Banking Financial Companies offer FD. The risk involved with FDs is practically zero as these do not get affected by market dynamics and are mostly government-backed and under the tight scrutiny of the RBI. Since it is a fixed-income instrument, you can know exactly how much you would make of your investment at maturity. Bajaj Finance is one such financier that offers the highest safety of funds as well as handsome returns. You can also opt for a non-cumulative payout where you get returns periodically.
Benefits of FD (Bajaj Finance Fixed Deposit)
Safe investment option for risk-averse investors
Bajaj Finance online Fixed Deposit has been credited with the highest safety ratings of (AAA) and (AAA) by CRISIL and ICRA respectively. These are the leading credit rating agencies in India.
High FD interest rates
Bajaj Finance offers fixed deposit interest rates up to 8.35% p.a. for citizens aged below 60 and for senior citizens, the rates can go up to 8.60% p.a. as they get an additional rate benefit of up to 0.25% p.a. on their deposits.
Loan against FD facility
Bajaj Finance FD offers a loan against the FD facility. You can easily get a loan of up to 75% of your FD value.
What is a Systematic Investment Plan?
SIP or Systematic Investment Plan is a method of investing in mutual funds systematically. It is an investment plan where an individual invests a fixed amount of money at regular intervals of time, typically monthly, into a mutual fund scheme. It is a simple and disciplined investment approach that helps individuals invest regularly in mutual funds and build wealth over the long term.
The best time to start investing in SIP is as early as possible. The earlier an individual starts investing, the more time their money will have to grow. Moreover, investing in SIP helps to create a habit of disciplined saving and investing, which is essential for long-term wealth creation.
Benefits of SIPs
Disciplined saving and investing - SIP helps to create a habit of disciplined saving and investing, which is essential for long-term wealth creation.
Risk mitigation - SIP helps to mitigate the risk of market volatility by investing regularly at different price points.
Power of compounding - SIP allows investors to take advantage of the power of compounding, which helps to generate higher returns at maturity.
Easy to start and manage - SIP is a simple and easy investment plan that can be started and managed online.
Difference between SIP vs FD
Table showing differences between SIP vs FD:
Particular |
SIP |
FD |
Investment amount |
Fixed amount at regular intervals |
A lump sum of money at one time |
Interest rate |
Depends on market movements |
Not subject to market fluctuations |
Liquidity |
More flexible as liquidity is high |
Less flexible as funds are locked-in |
Tenure |
Suitable for mid-term to long-term investment goals |
Suitable for all investment goals |
Risk involved |
Mid to high risk depending on chosen funds |
Zero to no risk involved |
SIP VS FD: Which is better?
In conclusion, choosing between SIPs and FDs should ideally depend on personal financial goals, risk appetite, and income. If you have a lump sum kept aside and growing wealth steadily is your aim, then, FD may be the right choice for you. However, if you are willing to take some risk and require more liquidity in hand, SIPs are ideal.
Bajaj Finance is one such safe and reliable investment tool that only will preserve your capital but also provide handsome returns. With a return rate going up to 8.60% p.a. you can grow your wealth easily with Bajaj Finance.
Calculate FD returns through our fixed deposit interest calculator.
