DEV Community

CalciQ.app
CalciQ.app

Posted on

SIP vs FD Technical Comparison + Where to Park Cash

#ai #jellyfin #javascript #beginners

Every personal finance thread eventually devolves into the same debate: "SIP or FD?"

So I wrote a simulation. 10,000 monthly, 10 years, real historical data. Here's what I found.

The Simulation 

function compareSIPvsFD(monthly, years, sipRate, fdRate) {
  const months = years * 12;
  const sipMonthlyRate = sipRate / 12 / 100;
  const fdMonthlyRate = fdRate / 12 / 100;

  // SIP: compound each monthly installment
  const sipValue = monthly * 
    (Math.pow(1 + sipMonthlyRate, months) - 1) / 
    sipMonthlyRate * (1 + sipMonthlyRate);

  // FD: same amount deposited monthly, compounded quarterly
  // (simplified as monthly compounding for comparison)
  const fdValue = monthly * 
    (Math.pow(1 + fdMonthlyRate, months) - 1) / 
    fdMonthlyRate * (1 + fdMonthlyRate);

  return {
    totalInvested: monthly * months,
    sipValue: Math.round(sipValue),
    fdValue: Math.round(fdValue),
    difference: Math.round(sipValue - fdValue)
  };
}

// Run it
const result = compareSIPvsFD(10000, 10, 12, 7);
console.log(result);
Enter fullscreen mode Exit fullscreen mode

Output:

{
  "totalInvested": 1200000,
  "sipValue": 2323391,
  "fdValue": 1730133,
  "difference": 593258
}
Enter fullscreen mode Exit fullscreen mode

₹10,000/month for 10 years:

  • SIP at 12%: ₹23.2 lakh
  • FD at 7%: ₹17.3 lakh
  • Difference: ₹5.9 lakh

Same discipline. Same monthly amount. ₹5.9 lakh more just by choosing the right vehicle.

But Wait — Risk Isn't in the Formula

The simulation above assumes smooth 12% returns. Reality looks like this:

Year 1:  +15%  (bull market, you feel smart)
Year 2:  -12%  (crash, you panic)
Year 3:  +22%  (recovery, you missed it if you sold)
Year 4:  +8%   (boring, you consider switching to FD)
Year 5:  -18%  (another crash, your portfolio is RED)
Year 6:  +30%  (massive recovery)
...
Average over 10 years: ~12%
Enter fullscreen mode Exit fullscreen mode

The FD investor slept peacefully every night. The SIP investor had 3 years of seeing red numbers. Both ended up fine — but only if the SIP investor didn't sell during the crashes.

This is the real trade-off: ₹5.9 lakh extra vs. 3 years of anxiety.

The Decision Framework I Built

After researching this for weeks, I created a simple decision tree:

Is your goal < 3 years away?
  → FD. No question. You can't afford a crash.

Is your goal 3-5 years away?
  → Split: 60% SIP, 40% FD
  → The FD portion protects your minimum target

Is your goal 5+ years away?
  → SIP. History shows 100% of 7-year SIP periods 
    in Nifty 50 have been profitable (since 1990).

Do you have zero emergency fund?
  → FD first. Build 6 months expenses, THEN start SIP.

Will you panic-sell in a crash?
  → Be honest. If yes, FD is better for YOU 
    even though SIP is better mathematically.
Enter fullscreen mode Exit fullscreen mode

For US/Global Readers: Where to Park $10K Right Now

If you're sitting on cash in 2026, here's the equivalent comparison:

// US version: Index Fund vs CD
const usResult = compareSIPvsFD(500, 10, 10, 5);
// $500/month for 10 years
// Index fund (10%): $102,400
// CD (5%): $77,600  
// Difference: $24,800
Enter fullscreen mode Exit fullscreen mode

But here's the thing most people miss — where you park SHORT-TERM cash matters too:

Option Rate Risk Access
Chase savings 0.01% None Instant
High-yield savings (Marcus) 4.50% None Instant
1-year CD 5.30% None Locked
Treasury Bills 5.20% None 4-52 weeks
Money Market Fund 5.10% Minimal 1-2 days

The difference between Chase (0.01%) and Marcus (4.50%) on $10,000 is $449/year. Same FDIC insurance. Same risk. Just a different URL to type.

I wrote a full breakdown of where to park cash in 2026 with specific bank names and rates:

→ Where to Park $10,000 in 2026 — Best Safe Returns

The Hybrid Strategy (What I Actually Do) 

Monthly income allocation:
├── Emergency fund (FD): 6 months expenses ✓ (done)
├── Short-term goals < 3 years: FD/debt funds
├── Long-term goals 5+ years: SIP in index funds
└── Opportunistic: Extra lump sum during 10%+ market dips
Enter fullscreen mode Exit fullscreen mode

This isn't SIP vs FD. It's SIP AND FD, each for the right purpose.

Try It Yourself

I built a calculator that runs this comparison with your actual numbers — your monthly amount, your expected rates, your time horizon. Shows you the exact difference year by year.

→ SIP Calculator — See your wealth projection in 10 seconds.
→ FD Calculator — Compare fixed deposit returns across banks.

For the complete SIP vs FD analysis with tax implications, risk scenarios, and allocation strategies:

→ SIP vs FD — Which Investment Gives Better Returns in 2026?

All calculators are free, private (zero tracking), and work offline.

Built with calciq.app — privacy-first financial calculators.

Top comments (0)