₹5,000 a Month: SIP vs FD vs RD vs PPF — What You'd Have After 5, 10 and 15 Years
The same ₹5,000 a month, four ways. Side-by-side maturity values after 5, 10 and 15 years at current small-savings rates, plus the tax and lock-in differences that matter more than the headline number.
By BizToolsIndia Editorial Team · Published · 5 min read
Key takeaways
- Over 15 years, ₹9 lakh invested becomes about ₹16.3 lakh in PPF at 7.1%, ₹15.5 lakh in an RD at 6.7% and ₹25.2 lakh in a SIP if it averages 12% a year.
- Over 5 years the gap is small — and a SIP's return isn't guaranteed. Over 15 years compounding at a higher rate makes the difference large.
- PPF interest is tax-free; FD and RD interest is taxed at your slab rate every year, so their post-tax return is lower than the table shows.
- Raising a SIP by 10% every year more than doubles the 15-year corpus compared with a flat ₹5,000.
- Most people are best served by a mix: guaranteed money for goals under 5 years, equity SIPs for goals 7+ years away.
The four options in one line each
- SIP (systematic investment plan): a fixed monthly amount into a mutual fund. Returns depend on the market — no guarantee, but historically higher over long periods for equity funds.
- PPF (Public Provident Fund): a government scheme, currently 7.1% a year (October–December 2026), 15-year lock-in, interest tax-free, deposits up to ₹1.5 lakh a year.
- RD (recurring deposit): a fixed monthly deposit with a bank or post office at a fixed rate. The post office 5-year RD currently pays 6.7%.
- FD (fixed deposit): a lump sum at a fixed rate. To compare with ₹5,000 a month, we put ₹60,000 into a new FD each year.
What ₹5,000 a month becomes
Assumptions: SIP contributions at the start of each month; PPF deposit of ₹60,000 by 5 April each year at 7.1%; RD at 6.7% compounded quarterly; FD ladder of ₹60,000 a year at 7% compounded quarterly. All rates held constant, before tax.
| Option | 5 years (₹3 lakh in) | 10 years (₹6 lakh in) | 15 years (₹9 lakh in) |
|---|---|---|---|
| RD at 6.7% | ₹3,56,829 | ₹8,54,273 | ₹15,47,743 |
| PPF at 7.1% | ₹3,70,281 | ₹8,92,050 | ₹16,27,284 |
| FD ladder at 7% | ₹3,71,213 | ₹8,96,398 | ₹16,39,417 |
| SIP at 10% a year | ₹3,90,412 | ₹10,32,760 | ₹20,89,621 |
| SIP at 12% a year | ₹4,12,432 | ₹11,61,695 | ₹25,22,880 |
Notice how the gap widens. After 5 years, a SIP averaging 12% is about ₹55,000 ahead of an RD. After 15 years it's nearly ₹10 lakh ahead. That's compounding: the extra return earns its own return, year after year.
Important
Tax changes the picture
The table is before tax, and the four options are taxed very differently.
| Option | How returns are taxed |
|---|---|
| PPF | Interest and maturity are tax-free. Deposits qualify for a deduction only under the old tax regime. |
| FD and RD | Interest is added to your income and taxed at your slab rate every year, even though you receive it only at maturity. Banks deduct TDS above the threshold. |
| Equity mutual fund SIP | Long-term gains (units held over 12 months) are taxed at 12.5% above ₹1.25 lakh of gains a year; short-term gains at 20%. Tax is due only when you sell. |
| Debt mutual fund SIP | Gains on units bought after 1 April 2023 are taxed at your slab rate, like FD interest. |
For someone in the 30% bracket, a 7% FD earns under 5% after tax, while PPF's 7.1% stays 7.1%. That's why PPF tends to beat FDs and RDs for long-term safe savings — the trade-off is the 15-year lock-in.
The step-up effect
Salaries rise, so most people can raise their monthly investment too. A SIP that starts at ₹5,000 and goes up 10% every year (₹5,500 in year 2, ₹6,050 in year 3 and so on) puts in ₹19,06,349 over 15 years. At 12% a year it grows to about ₹43,41,925 — compared with ₹25,22,880 for a flat ₹5,000.
You can test your own numbers with the step-up field in the SIP Calculator.
Which one should you pick?
| Your goal | Usually suits |
|---|---|
| Emergency fund | FD or a savings account — you need the money any time |
| Goal in 1–3 years (bike, wedding, deposit) | RD or FD — a fixed amount on a fixed date |
| Goal in 3–7 years | A mix: mostly FD/RD, some balanced or hybrid fund |
| Retirement, child's education 10+ years away | Equity SIP for growth, PPF for the guaranteed, tax-free part |
There's no single winner. A common approach is to keep 3–6 months' expenses in an FD, fill PPF up to what you're comfortable locking away, and run an equity SIP for long goals. This is general information, not personal investment advice — speak to a SEBI-registered adviser for a plan built around you.
Run your own numbers
Plug in your amount, rate and period: SIP Calculator, PPF Calculator, RD Calculator and FD Calculator. For a lump sum at any compounding frequency, use the Compound Interest Calculator.
Frequently asked questions
Is SIP better than FD?
Over long periods, equity SIPs have historically returned more than FDs, but with no guarantee and real ups and downs. For money you need within 3 years, an FD is usually the safer fit.
Can I withdraw PPF money before 15 years?
Partial withdrawals are allowed from the 7th financial year, and loans against PPF from the 3rd year, within limits. Full closure before 15 years is allowed only in specific cases such as serious illness or higher education.
Are PPF and RD rates fixed for the whole term?
No. The government resets small-savings rates every quarter. PPF's rate applies to your whole balance, so it can change during the term. A post office RD locks in the rate on the day you open it.
What return should I assume for a SIP?
Try a range — for example 8%, 10% and 12% — rather than one number. Past returns don't guarantee future ones, and costs and taxes reduce what you keep.