Recurring Deposit Vs Systematic Investment Plan – Be Wise in Selecting
Recurring Deposit is a kind of term deposit offered by banks; wherein an investor invests a fixed amount every month for a given term/duration. Systematic Investment Plan, popularly known by the term SIP in mutual funds is equivalent to Bank Recurring Deposit in concept. Recurring Deposit vs SIP Key Characteristic Recurring Deposit Equity SIP Long Term Potential Return 7% 15% Tax efficient No Yes Liquidity No Yes Flexibility No Yes Wealth Creation: RD Vs SIP An Rs 10,000 Monthly investment into RD over 30 years would be worth Rs 1.22 Crores; while the same investment into an Equity SIP would be worth 6.92 Cr. The incremental gain would be Rs 5.7 Cr by selecting right investment option. Conclusion: A Rs 10,000 SIP over 30 years can add Rs 5.7 Cr more than an Bank RD. Apart from wealth creation an SIP offers investment flexibility (no penalty if a monthly payment ...