cough syrup13 min ago
SIP vs FD: Which can create higher corpus on Rs 6 lakh investment in 10 years?
- Written by Anamika Singh
Published: Zee Business| Updated: Zee Business
If you are confused about whether SIP is better than FD or FD is better than SIP. This article will clarify some of the concepts to help you get to a conclusion. FD involves a lump sum investment at one time. Whereas, SIP involves investment of fixed amounts at regular intervals. FD is suitable for all investment goals, on the other hand, SIP is suitable for short-term and long-term goals. The choice between the FD and SIP depends on individual financial goals and risk tolerance. Thus, let’s find out which can generate higher corpus on Rs 6 lakh investment in 10 years.
Photos source: Pixabay/Representational
(Disclaimer: Our calculations are projections and not investment advice. Do your due diligence or consult an expert for financial planning)
1/12
Fixed deposit (FD)
1/12Fixed deposit (FD) is one of the popular ways to invest money. They are non-market-linked investments with stable returns. It allows investors to invest a lump sum amount for a fixed period, earning a predetermined interest rate throughout the investment period.
2/12
Systematic investment plan (SIP)
2/12A systematic investment plan (SIP) is a way of investing a fixed amount in a mutual fund SIP. One can start with a small amount of Rs 100.
3/12
How does FD work?
3/12It requires a one-time deposit for a set period of time with a fixed interest rate.
4/12
How does SIP work?
4/12A fixed amount is automatically deducted from your bank account and invested in mutual funds. These investments happen regularly, and you get units based on the fund’s value (NAV).
5/12
Benefits of FD
5/12FD provides flexible payout options FDs are transparent and have a predetermined return structure. FDs are not subject to market fluctuations
6/12
Benefits of SIP
6/12Through the power of compounding, SIPs can offer significant long-term growth potential. SIPs encourage financial discipline by committing to regular investments.
7/12
FD calculation conditions: Rs 6 lakh investment for 10 years
7/12Yearly investment: Rs 6,00,000 Time period: 10 years Rate of interest: 7.5 per cent
8/12
FD: What will be your corpus in 10 years with Rs 6,00,000 investment?
8/12The maturity amount in 10 years will be Rs 12,61,410, and the estimated returns will be Rs 6,61,410.
9/12
SIP investment conditions
9/12In SIP, we will do the calculations on monthly investment i.e. Rs 6,00,000/120 which will result in Rs 5,000 monthly SIP. Since there are no fixed returns in SIP investment, we are calculating as per annualised returns of 8 per cent (debt fund), 10 per cent (equity fund) and 12 per cent (hybrid fund)
10/12
SIP: Retirement corpus on Rs 5,000 investment for 10 years (hybrid fund)
10/12At 12 per cent annualised return, the estimated investment amount will be Rs 6,00,000. The estimated capital gains will be Rs 5,61,695, and the estimated retirement corpus will be Rs 11,61,695.
11/12
SIP: Retirement corpus on Rs 5,000 investment for 10 years (equity fund)
11/12At 10 per cent annualised return, the estimated capital gains will be Rs 4,32,760, and the estimated retirement corpus will be Rs 10,32,760.
12/12
SIP: Retirement corpus on Rs 5,000 investment for 10 years (debt fund)
12/12At 8 per cent annualised return, the estimated corpus in 10 years will be Rs 9,20,828. The estimated capital gains will be Rs 3,20,828.
- 1
- 2
- 3
- 4
- 5
- 6