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FD vs. RD vs. PPF: Which Gives More in 5 Years?
Published August 24, 2026 · Toolsda
Want your own numbers instead of the examples below?Open the FD + RD Calculator — plug in your amount, rate, and tenure.The short answer
Rupee for rupee at a similar interest rate, a lump-sum FD generally builds the most in 5 years, RD builds less on the same total money because deposits happen monthly instead of upfront, and PPF can't fully mature in 5 years at all — it has a mandatory 15-year lock-in. Which one is actually "best" depends on whether you need the money back at year 5, and on your tax slab, not just on the headline rate.
Worked example: FD vs. RD, same total money, 5 years
Using the same compound-interest formula the FD Calculator runs (quarterly compounding, no senior citizen bonus), at 7% for 5 years:
| Option | You invest | Maturity value |
|---|---|---|
| FD — ₹3,00,000 lump sum | ₹3,00,000 on day one | ≈ ₹4,24,000 |
| RD — ₹5,000/month | ₹3,00,000 total, spread over 60 months | ≈ ₹3,60,000 |
The gap is entirely about when the money starts earning interest. The FD's full ₹3,00,000 compounds from day one; the RD's last few installments barely earn anything before maturity. RD isn't a worse product — it's the right tool when you don't have ₹3,00,000 upfront and are saving from monthly income instead.
Where PPF fits — a different shape of comparison
PPF has a mandatory 15-year lock-in, so there is no "PPF maturity value at year 5" — only a running balance toward a maturity that's a decade away. Using PPF's own yearly-compounding formula at the current 7.1% rate, with the maximum allowed ₹1,50,000/year contribution:
| After 5 years of max contributions | Amount |
|---|---|
| Total invested | ₹7,50,000 |
| Balance (tax-free) | ≈ ₹9,26,000 |
| Interest earned so far | ≈ ₹1,76,000 |
That balance is still locked — you can take a loan against it from year 3, and a partial withdrawal from year 7, but not the full amount until year 15 (or a 5-year extension block after that). The comparison that actually matters isn't "which is worth more," it's "which am I willing to lock away."
The tax difference changes the real winner
PPF is EEE — your deposit, the interest, and the maturity amount are all tax-free. FD and RD interest is fully taxable at your income slab, and banks deduct 10% TDS once interest crosses ₹40,000/year from one bank (₹50,000 for senior citizens). At a 30% tax slab, a 7% FD nets roughly 4.9% effective — below PPF's tax-free 7.1%. The "higher rate" option on paper isn't always the higher net return once tax is applied.
How to pick — 3 questions
- Do you need this money back within 5 years? If yes, PPF is off the table regardless of its rate.
- Do you have a lump sum, or are you saving monthly? Lump sum favors FD; monthly income favors RD.
- What's your tax slab? Higher slabs make PPF's tax-free status worth more relative to FD/RD's taxable interest.
Run your own numbers on the FD + RD Calculator and the PPF + EPF Calculator — both show tax-saved and yearly breakdowns alongside the maturity figure.
Frequently Asked Questions
Can I actually compare PPF to FD/RD over 5 years, if PPF has a 15-year lock-in?
Only as a mid-point value, not a maturity comparison — PPF can't be withdrawn in full at year 5. What you can compare is the accumulated balance at year 5 of an ongoing 15-year PPF against an FD or RD that actually matures at year 5. They answer different questions: "which is worth more in 5 years" vs. "which can I access in 5 years."
Why is FD interest taxed but PPF is not?
PPF is a government scheme classified EEE (Exempt-Exempt-Exempt) — your deposit, the interest earned, and the maturity amount are all tax-free. FD and RD interest is fully taxable at your income slab, and banks deduct TDS once it crosses ₹40,000/year (₹50,000 for senior citizens) from a single bank.
Does a higher FD rate always mean better returns than PPF?
Not after tax. A 7% FD taxed at a 30% slab nets roughly 4.9% effective — below PPF's tax-free 7.1%. FD can still win for someone in a lower tax bracket, or when the money needs to be accessible before 15 years.
Is RD ever better than a lump-sum FD for the same total money?
Rarely, for identical total contribution — RD deposits happen monthly, so each installment earns interest for less time than a lump sum deposited on day one. RD's real advantage is discipline: it works when you don't have the lump sum upfront and are saving from monthly income instead.