Introduction
Investment comparison means projecting the same lumpsum amount forward across different asset classes at their respective assumed return rates, so you can see the actual rupee gap between options like FD, SIP, PPF, NPS, gold, and real estate side by side.
Choosing the right investment avenue can be daunting. With numerous options like Fixed Deposits (FD), Systematic Investment Plans (SIP) in mutual funds, Public Provident Fund (PPF), National Pension System (NPS), Gold, and Real Estate, it is crucial to understand how your money will grow in each. This calculator lets you evaluate these asset classes side-by-side.
How Investment Comparison Works
This calculator uses the principle of compound interest to project future wealth. By inputting your initial lumpsum investment amount, your desired time horizon, and the expected annual return rate for each asset class, the calculator extrapolates the future value. We use annual compounding as a standard baseline to ensure an apples-to-apples comparison across different financial instruments.
FD vs SIP Comparison
Fixed Deposits offer guaranteed returns and capital protection, making them ideal for short-term goals and risk-averse investors. However, their post-tax returns often fail to beat inflation. SIPs in equity mutual funds, while subject to market risks, historically deliver higher inflation-beating returns (12-15% p.a.) over a 7-10 year horizon. When you compare the two over 15 years, the wealth gap becomes substantial due to compounding.
SIP vs PPF Comparison
PPF is a government-backed, completely tax-free (EEE) retirement savings scheme currently offering around 7.1% p.a. It has a strict 15-year lock-in. SIPs offer higher potential returns and high liquidity but are subject to a 12.5% Long Term Capital Gains (LTCG) tax. PPF provides a rock-solid debt foundation, while SIPs provide aggressive growth.
Gold vs Mutual Funds
Gold is universally recognized as a hedge against inflation and economic instability, historically returning 8-9% annually. Mutual Funds (equities) are growth assets representing ownership in businesses. While gold preserves purchasing power, equities are generally required to significantly compound wealth and achieve financial independence.
Factors Affecting Investment Returns
- Inflation: Always calculate the "real return" by subtracting inflation from your expected return.
- Taxation: Different assets are taxed differently. PPF is tax-free, FDs are taxed at slab rates, and equities have LTCG tax.
- Time Horizon: The longer you stay invested, the more compound interest works in your favor.
- Risk Tolerance: Higher returns almost always necessitate enduring higher volatility.
Safety, regulation, and who protects your money
Bank deposits are insured up to a limit. Fixed deposits and savings balances at an insured bank are covered by DICGC (a wholly-owned RBI subsidiary) up to Rs 5 lakh per depositor per bank, combining principal and interest. Amounts above that limit at a single bank are not protected if the bank fails.
Mutual funds are regulated by SEBI. SEBI sets the rules for how mutual funds operate, and AMFI is the industry body that mutual fund registrars work under. Unlike a bank deposit, a mutual fund's value is not insured. It is market-linked and can fall, though the fund itself is not permitted to use your money for anything other than the stated investment strategy.
Combined tax deduction limit across these instruments. Contributions to PPF and the mandatory 12 percent EPF already use up part of the Rs 1.5 lakh Section 80C limit, and NPS adds a further Rs 50,000 under Section 80CCD(1B) for a combined maximum of Rs 2 lakh. This applies only under the old tax regime.
Choosing by time horizon
The right instrument depends more on when you need the money than on which one has the highest headline return.
| Time Horizon | Better Suited Options | Why |
|---|---|---|
| Under 3 years | FD, liquid funds | Capital protection matters more than growth over a short window, and equity can be volatile in the short term. |
| 3 to 7 years | FD, short-duration debt funds, a smaller SIP allocation | Enough time to smooth out some equity volatility, but still short enough that a market downturn near the goal date is a real risk. |
| 7 to 15 years | SIP, PPF | Long enough for equity market cycles to average out, and PPF's 15-year lock-in fits naturally. |
| 15+ years, retirement-focused | SIP, NPS | The longest horizons can absorb the most volatility, and NPS is specifically structured to lock in until retirement. |
Benefits of Comparing Investments Before Investing
Comparing investments helps you avoid the "opportunity cost" of placing long-term money into short-term, low-yield instruments. By visualizing the projected wealth trajectory, you can build a diversified portfolio that balances the high returns of SIPs and NPS with the stability of PPF and FDs.
Example Calculation
If you invest ₹5,00,000 for 15 years:
- In an FD at 7%, it grows to approximately ₹13.7 Lakhs.
- In a SIP at 12%, it grows to approximately ₹27.3 Lakhs.
The difference of ₹13.6 Lakhs illustrates why choosing the right asset class for your long-term goals is vital.
SIP Calculator
Decided SIP is the right fit? Plan the exact monthly amount instead of a lumpsum.
Liquidity and lock-in compared
Return rate is only half the decision. How easily you can get your money back matters just as much, especially for a goal with a fixed deadline.
| Instrument | Lock-in | Getting money out early |
|---|---|---|
| Fixed Deposit | None, but tenure is fixed at opening | Premature withdrawal allowed with a reduced interest rate |
| Mutual Fund (SIP) | None for regular open-ended funds | Redeem any business day, proceeds in 1 to 3 days |
| PPF | 15 years | Partial withdrawal allowed from year 7 only |
| NPS | Until age 60 | Limited partial withdrawal for specific reasons only |
| Gold | None for physical gold or gold ETFs | Sell anytime, though Sovereign Gold Bonds have a multi-year term with fixed exit windows |
| Real Estate | None formally, but practically illiquid | Can take months to sell, with significant transaction costs |
Limitations of this calculator
It assumes a flat, constant return for the full period. Real equity, gold, and real estate returns vary year to year. A single average rate smooths over that volatility, which understates how different the actual journey could look.
It models a one-time lumpsum, not ongoing contributions. Most SIP or NPS investors contribute monthly rather than investing the full amount upfront. Use the SIP Calculator or NPS Calculator for a recurring-contribution projection instead.
Taxes and exit costs are not deducted from the final figures. Each instrument here has different tax treatment and exit costs, covered in the sections above, none of which are subtracted from the projected numbers automatically.
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