Where To Invest Money - SIP vs Recurring Deposit?
Nutan Gupta
Nutan Gupta
13th December 2022 - 11:50 pm
Systematic Investment Plan (SIP) is a monthly investment in Mutual Funds while Recurring Deposit (RD) is a type of bank deposit. However, there are some basic differences between SIP and RD which one needs to understand before investing.
SIP | RD | |
|---|---|---|
| Investment | One can invest in mutual funds through SIP which can be weekly, monthly or quarterly. | RD is like a fixed deposit account where one can make monthly investments. |
| Investment Scheme | An investor has an option to decide on the equity or debt scheme, depending on his risk appetite. | An investor has only one choice of the scheme - to invest in a deposit with fixed rate of return. |
| Returns | The returns in SIP depend on the performance of the equity or debt market. Usually, SIP gives returns of 12-15%. | The returns in RD are fixed and are known to an investor at the time of starting RD. Usually, the returns in RD ranges between 7.1-8.5%. |
| Risk | As the returns in SIP depend on market performance, SIP carries some risk. However, research suggests that SIP has given positive returns over a longer period of time. | RD is completely risk-free as the rate of returns are fixed. |
| Liquidity | SIP is a very liquid investment. One can close the SIP and withdraw money anytime without bearing any exit load. | Though RD is liquid, pre-mature withdrawal charges may be applicable. |
Characters remaining
(1500)
View All
FREE Trading & Demat Account
Discover more of what matters to you.
