Direct answer
FD = fixed return (big banks ≈ 6.25–6.5% for 1–5 years, Oct 2026), fully taxable, easy to access. PPF = 7.1% (Oct–Dec 2026), government-backed and tax-free, but locked for 15 years. Equity SIP = no fixed return, can fall in value, but historically the best long-run growth. Use FDs for money needed soon, PPF for long-term tax-free debt, SIPs for goals 7+ years away.
At a glance (rates as of 3 October 2026)
| Equity mutual fund SIP | Bank FD / RD | PPF | |
|---|---|---|---|
| Return | Market-linked; not guaranteed | Fixed at booking: SBI 6.25% (1–2 yr), HDFC/ICICI 6.5% (3–5 yr) | 7.1% a year, reset quarterly |
| Senior citizen extra | — | +0.50% at most banks | — |
| Risk | Can fall, especially short term | Very low; DICGC cover up to ₹5 lakh per bank | Sovereign-backed |
| Lock-in | None (ELSS: 3 years) | Tenure you choose; penalty on early exit | 15 years; partial withdrawal from year 7 |
| Min / max | Scheme minimums, often ₹100–₹500 a month | Bank minimums; no max | ₹500 – ₹1.5 lakh a year |
| Tax on returns | Equity LTCG 12.5% above ₹1.25 lakh; STCG 20% | Interest at slab rate, yearly; TDS above ₹50,000 (₹1 lakh seniors) | Fully exempt (EEE) |
| Best for | Goals 7+ years away | Goals within 1–5 years, emergency fund layer | Long-term, tax-free debt allocation |
Sources: PPF — National Savings Institute rate table (Q3 FY 2026-27); FD — SBI, HDFC Bank, ICICI Bank rate pages; tax — SBI MF Tax Reckoner FY 2026-27.
₹10,000 a month: what each could become
| Horizon | Invested | SIP @ 10%* | SIP @ 12%* | RD/FD @ 6.5% | PPF @ 7.1% |
|---|---|---|---|---|---|
| 5 years | ₹6,00,000 | ₹7.81 lakh | ₹8.25 lakh | ₹7.10 lakh | ₹7.41 lakh (locked) |
| 10 years | ₹12,00,000 | ₹20.66 lakh | ₹23.23 lakh | ₹16.90 lakh | ₹17.84 lakh (locked) |
| 15 years | ₹18,00,000 | ₹41.79 lakh | ₹50.46 lakh | ₹30.43 lakh | ₹32.55 lakh |
After tax (30% slab investor)
| Horizon | SIP @ 10%* | SIP @ 12%* | RD/FD @ 6.5% | PPF |
|---|---|---|---|---|
| 5 years | ₹7.74 lakh | ₹8.12 lakh | ₹6.73 lakh | ₹7.41 lakh |
| 10 years | ₹19.69 lakh | ₹21.94 lakh | ₹15.14 lakh | ₹17.84 lakh |
| 15 years | ₹38.86 lakh | ₹46.40 lakh | ₹25.64 lakh | ₹32.55 lakh |
*Equity returns are assumptions, not forecasts. SIP tax assumes the whole corpus is redeemed in one year with only one ₹1.25 lakh LTCG exemption (12.5% + 4% cess). RD/FD tax is approximated by compounding at the post-tax rate (4.47%) because interest is taxed every year. PPF assumes ₹1.2 lakh deposited by 5 April each year. Monthly bank RDs rarely exceed 10 years — treat the 15-year RD/FD figure as rolling deposits at the same rate.
15-year post-tax picture
For a 30% slab investor, PPF's tax-free 7.1% beats a 6.5% FD by a wide margin over 15 years. An equity SIP has a higher expected value but a wide range of outcomes — in a poor decade it could end below PPF.
How to choose: by goal, not by product
| Goal horizon | Suits | Why |
|---|---|---|
| Emergency fund | Savings + sweep FD / liquid fund | Access within days, no loss of capital |
| 1–3 years (car, fees) | FD / RD | Known maturity value |
| 3–7 years | Mix of FD/debt and some hybrid/equity | Balance of growth and certainty |
| 7+ years (retirement, child's education) | Equity SIP + PPF | Growth from equity, tax-free stability from PPF |
Run your own numbers: SIP calculator, FD calculator, PPF calculator and RD calculator. For a daughter's goals also compare the Sukanya Samriddhi calculator (8.2%). Set the split with the asset allocation guide.