SIP vs FD vs PPF: Where Should ₹10,000 a Month Go?
Short answer: They do different jobs. After 15 years of ₹10,000 a month (₹18 lakh deposited), PPF at 7.1% gives about ₹31.56 lakh and is tax-free. A fixed deposit at an assumed 7% gives about ₹31.88 lakh before tax, or about ₹26.43 lakh after tax at the 30% slab. A SIP at an assumed 12% would give about ₹50.46 lakh, but equity returns are not guaranteed and can be far lower.
The three options in one line each
- PPF: a government scheme with a rate set every quarter (7.1% for October to December 2026), a 15-year term and tax-free interest. Up to ₹1.5 lakh a year.
- FD (fixed deposit): a bank deposit with a rate fixed when you invest. Interest is added to your income and taxed at your slab rate.
- SIP in an equity mutual fund: a fixed monthly investment into a fund that holds company shares. Returns vary and are not guaranteed.
The numbers for ₹10,000 a month over 15 years
| Option | Assumed yearly return | Value after 15 years | Money you put in |
|---|---|---|---|
| FD, before tax | 7% | ₹31,88,112 | ₹18,00,000 |
| FD, after 30% tax | 4.82% | ₹26,42,776 | ₹18,00,000 |
| PPF | 7.1% | ₹31,55,680 | ₹18,00,000 |
| SIP | 8% | ₹34,83,451 | ₹18,00,000 |
| SIP | 12% | ₹50,45,760 | ₹18,00,000 |
Please read the assumptions. The PPF rate is the current official rate. The FD rate of 7% is only an example, because bank rates differ and change. The SIP rates of 8% and 12% are illustrations, not forecasts. The FD row treats each monthly deposit as earning the same yearly rate, which is a close estimate and not how a bank computes a real deposit.
Why tax changes the answer
FD interest is taxed every year at your slab rate. At the 30% slab with 4% cess, your tax is 31.2% of the interest, so a 7% FD gives you about 4.82% after tax. PPF interest and the maturity amount are tax-free, so its 7.1% is also its after-tax rate. This is why PPF can beat an FD that shows a similar headline rate, for anyone in a higher slab. Equity gains are also taxed, so check the current rules before you plan.
Risk and flexibility
- FD: no market risk, and you can usually break it early with a small penalty. Bank deposits are covered by deposit insurance up to a limit, so check the current limit.
- PPF: no market risk, but money is locked for 15 years. Partial withdrawals are allowed only from the 7th financial year.
- SIP: your fund can fall in value, sometimes for years. Over long periods, equity has historically paid more than fixed-rate options, but there is no guarantee, and you can lose money over short periods.
Matching the product to the goal
- Goal within 3 years (a wedding, a car): an FD or a similar safe option, because you cannot afford a fall.
- Goal of 10 years or more (retirement, a child’s education): a mix of PPF for the safe part and an equity SIP for growth.
- Emergency money: keep it in an easily accessible account, not in a SIP. See our guide on the emergency fund.
Try your own amounts with the SIP calculator and the PPF calculator. If you want to know what return an old investment actually earned, use the CAGR calculator.
Keep reading
- How Much SIP Do You Need for ₹1 Crore in 10 Years? — Investing basics, 6 min read
- Rule of 72: How to Know When Your Money Doubles — Investing basics, 5 min read
- Home Loan Prepayment vs SIP: Which Is Better? (The Math) — Loans, 7 min read
- How Much Emergency Fund Do You Need? A Simple Formula — Money basics, 6 min read
Frequently asked questions
Which is better: SIP, FD or PPF?
None is better for every goal. PPF and FD give predictable returns with little risk. A SIP can earn more over many years but can also lose money. Match each to the time you have and the risk you can accept.
Is PPF better than FD?
For someone in a higher tax slab, PPF often leaves more money in hand because its interest is tax-free, while FD interest is taxed. FDs are more flexible, as PPF locks your money for 15 years.
How much can I deposit in PPF each year?
You can deposit a minimum of ₹500 and a maximum of ₹1.5 lakh in a financial year. At ₹10,000 a month you are within the limit.
Are SIP returns guaranteed?
No. A SIP invests in market-linked funds, so the value can rise or fall. The 8% and 12% used here are illustrations only.
Sources: National Savings Institute — Public Provident Fund · AMFI — mutual fund investor information · SEBI Investor Website