If you're deciding where to put your savings, SIPs, Fixed Deposits, and PPF get recommended constantly — often without much explanation of how differently they actually behave. Here's the practical comparison.
Fixed Deposit (FD): the predictable one
You lock in a lump sum for a fixed tenure at a fixed interest rate — currently often in the 6.5–7.5% range depending on the bank and tenure. The return is guaranteed and the risk is essentially zero, but interest earned is fully taxable at your income slab rate, which quietly eats into the real return. Run your numbers on the FD Calculator — it factors in your chosen compounding frequency (monthly, quarterly, etc.), which changes the payout more than people expect.
PPF: the slow-and-steady tax-free option
A Public Provident Fund locks your money for 15 years at a government-set rate (currently 7.1% p.a.), capped at ₹1,50,000 per year. The tradeoff for that long lock-in is that PPF has EEE tax status — your contribution, the interest, and the maturity amount are all tax-free. Over a full 15-year term, that tax-free compounding often outperforms an FD's post-tax return by a meaningful margin. The PPF Calculator shows your year-by-year balance so the compounding isn't just an abstract number.
SIP: the one with no ceiling (and no floor)
A Systematic Investment Plan into mutual funds doesn't guarantee anything — your return depends entirely on market performance. But historically, equity-oriented mutual funds have outpaced both FD and PPF returns over long horizons (7+ years), specifically because you're taking on market risk in exchange for that upside. The SIP Calculator lets you plug in a monthly amount, an assumed return rate, and a time horizon to see the gap between what you invest and what compounding could add on top.
So which one?
They're not really competing for the same job:
- FD — money you need safe and accessible within a few years, no risk tolerance
- PPF — long-term, tax-free, disciplined savings you won't touch for 15 years
- SIP — long-term wealth building where you can tolerate market ups and downs
Most people who actually build wealth aren't picking one — they're using FD for the emergency fund, PPF for guaranteed long-term tax-free savings, and SIP for the growth portion. Before committing real money to any of them, run your actual numbers through the calculators above, and check what regime and deductions apply to you with the Income Tax Calculator — the after-tax return is the one that actually matters.