SIP (Systematic Investment Plan) is the Mutual Fund investment product that allows you to make an investment in installments in equity, debt or both the instruments. When you invest in mutual funds, you can invest a lump sum or invest a sum regularly via SIP.
FD (Fixed Deposit) is basically lump sum investment instrument in which you can invest the corpus with the banks/Financial Institutions and earn the interest income during the tenure of investment.
FD and Mutual Fund investment through SIP vary significantly in terms of return, tax implication and liquidity. Following are the key difference between investment through FD and SIP.
SIP is better than FD on the basis of tax benefits, flexibility of investment, higher return and diversification advantage. FD suits a conservative investor whereas SIP offers options to conservative and aggressive investors both.