Difference between Systematic Investment Plan & Recurring Deposit
Risk Opportunities: Recurring Deposit is India’s most popular investment option, especially for those who aren’t willing to take any risks. Recurring deposit investing is not only risk-free, but also offers guaranteed returns. SIP, on the other hand is slightly different. This is the easiest and most risk-free way to invest.
Return On Investment: With RD, you receive a fixed income in advance. It can be opened at all major banks and post offices. This allows you to invest a specific amount and receive interest at a fixed rate. Investors will receive both their invested capital and the earned interest at the end of this plan. SIP investment is made in a mutual fund scheme whose return is not predetermined. It is dependent on the performance in the stock market. SIP investments can also be subject to market-related risks. We have detailed information on how much risk mutual funds pose.
SIP is an investment in mutual funds. Depending on your monthly investment and NAV of the scheme you choose, the unit will be allotted to you. The NAV curve for the units of your scheme fluctuates depending on how much you have invested. When you withdraw SIP, the NAV curve of your units will determine the amount you receive. You can stop investing in SIP, but you can keep the unit until then.
The main difference between RD and RD is While both RD and SIP require investors to make regular deposits, RDs can be used for as long as they wish. The best option between SIP and recurring deposits is dependent on the investor’s willingness to take risks and how long he is able to invest.
While mutual funds’ returns are completely market-based, investments that last longer than five years can yield a return of 15%-18% per year. You can calculate the maturity value of mutual funds by using SIP Investment. This allows you to know how much you can earn on a fixed return if you deposit regularly.
