Mutual Fund vs SIP vs FD things you need to know

A Fixed Deposit (FD) gives you interest on the money you put in, while a Mutual Fund (MF) gives you returns on the money you put in. Whether a Mutual Fund, Systematic Investment Plan(SIP), or Fixed deposit is best for you depends on your financial goals.

An FD gives you interest, while an MF gives you returns. Your financial goals determine whether MF, SIP, or FD is best.

Each way to invest has its pros and cons. A SIP or a mutual fund may give you more interest, but a fixed deposit is safer and gives you a guaranteed return. We did a lot of research so you don’t have to so you can make an informed choice. Read on to find out which investment plan is best for you.

What is a Mutual Fund?

In simple terms, a Mutual Fund is a fund that takes money from different investors and puts it back into different businesses. All of the investors get back their money in proportion to how much they put in. Here are some good reasons to think about a mutual fund:

  • Mutual funds are long-term plans that help you reach your long-term goals.
  • The lock-in period for a Mutual Fund depends on your chosen scheme, but you may exit when you wish to.
  • Any gains you make before the year-end are taxed under short-term capital gains tax.
  • Mutual funds have a broader way of categorizing their funds to meet the different needs of people who want to invest.

What is a Systematic Investment Plan (SIP)?

A structured Investment Plan (SIP) is a type of investment that lets you put in small amounts of money every month. SIPs could help new investors get started with mutual funds. SIPs can also be held for a long time. People can invest at any time that works for them. Here are some of the good things that come with having a SIP account:

  • SIP is easy to start, and a bonus is that you can check on how the assets are doing whenever you want.
  • SIPs eliminate the need for investors to monitor interest rates because you make investments regularly.
  • SIPs also offer tax benefits, which is another great perk. People who keep their money in SIPs for more than a year can get tax breaks.
  • Since SIPs are in open-ended funds, money can be put in and taken out at any time.

What is a Fixed Deposit (FD)?

A fixed deposit, or FD, is a type of investment that lets people put away a certain amount of money for a certain amount of time. This service is offered by banks and companies that are not banks (NBFCs). You can only break the FD if certain things happen during its term. If you want to do this, you will have to pay some fees to the bank/NBFC.

Shriram Transport Finance Company (STFC) gives you a higher rate of interest on an FD, which helps you reach your goals for the future. Here are some reasons why you might want to open a fixed deposit:

  • A fixed deposit is a risk-free investment because the interest rates don’t change with the market.
  • It gives people who want to invest a lot of freedom because they can choose the amount and length of time they want to support.
  • Based on the amount and length of the fixed deposit, you can get a loan.
  • At the end of the FD’s term, the person’s account will be credited with the amount invested plus interest.

Also Read: Is R&D a cost or an investment? How a value investor should look at R&D

Differences between a Mutual Fund vs SIP vs FD

Parameters Mutual FundSIPFD
No assured returns
No assured returns
Returns are guaranteed but depend on the interest rate prevailing from time to time




Mode of investment
In installments

Min tenure: 1 day
Max tenure: limitless
Min tenure: 1 day
Max tenure: 3 to 5 years
Min tenure:7day
Max tenure: limitless

Which type of investment scheme should you invest in?

Taking into account all the benefits and risks, a fixed deposit is always the safest way to invest. You can always use an FD calculator to find out the exact interest rate you can get for the amount you want to deposit. Indian Rating and Research has given STFC’s fixed deposits an “IND AA+/Stable” rating, which means they are very safe.

Mutual funds and SIPs can grow your money faster than a fixed deposit (FD), but they are also riskier because they are affected by changes in the market. You can choose how much risk you want to take. An FD is much more stable and can give you guaranteed returns on your investments. An FD doesn’t give you much money back, and its value may go down because of inflation.


You and your financial goals will have to make the final choice. Now that you know how a mutual fund, SIP, and FD are different, you can make the right choice after thinking about all the factors. You can be sure to get a return on your money if you put it in a safe fixed deposit with Shriram Finance. Depending on what kind of investment you want to make, you can check the interest rates.

Key highlights:

  • Mutual funds and SIP investments offer higher returns on your investments.
  • Investing in a fixed deposit is risk-free
  • You can use an FD calculator to find the exact interest rates for a deposit of your preference
  • You can withdraw money from a SIP at any given time after investing

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