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an SIP offers investment flexibility (no penalty if a monthly payment is missed as in RD), offers liquidity (Can be withdrawn anytime, no lock in as RD), tax efficient (long term capital gain is taxed at 10%, while in a RD you pay based on your tax slab and could lead up to 30%).

Investors should focus on long term wealth creation; We expertise in financial planning and wealth creation. We offer investment solution be it risk planning, liquidity planning, debt management, wealth creation, retirement planing. If you want to make your money work for you, feel free to write to us on merafundadvisors@gmail.com or can reach us on +91 7338094513. 

 Author, VR Aiyappan,CFA,FRM is an Investment Expertise and has more than decade experience spanning across Investment Management, Consulting and Advisory. Has Clientele across India, Dubai,Kuwait and other parts of the world


Comments

  1. UnknownJanuary 3, 2019 at 2:49 AM

    Ah! Good one. I have also started to earn well and love when I come across such informative posts. This is going to be very helpful to me and must consider it. Also, my dad was talking about Claim Settlement Ratio before I opt for any investment or insurance plans.

    ReplyDelete

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