Question 1

Is SIP better than Fixed Deposit for long-term investment?

Accepted Answer

Yes. Over 5 to 10+ years, Equity SIP historically delivers 12%–14% CAGR compared to 6.5%–7.5% on FDs. In addition, equity LTCG tax is just 12.5% on gains above ₹1.25 Lakhs, whereas FD interest is taxed at your full marginal income tax slab up to 30% plus cess.

Question 2

How much extra wealth does an Equity SIP generate compared to an FD?

Accepted Answer

For a ₹10,000 monthly investment over 10 years, an Equity SIP at 12% CAGR yields approximately ₹23.2 Lakhs (gross) and ~₹22 Lakhs (net after LTCG tax). In contrast, a 7% bank FD in a 30% tax bracket yields only ~₹15.1 Lakhs net post-tax—a wealth difference of over ₹7 Lakhs.