What is Difference Between Recurring Deposit and SIP?

What is Difference Between Recurring Deposit and SIP?

by

Friends, today we will talk about What is Difference Between Recurring Deposit and SIP, What is Recurring Deposit, What is SIP, Which is Better SIP Or Recurring Deposit

There will be many of you who must have heard about RD i.e. Recurring Deposit and SIP i.e. Systematic Investment Program.

Apart from this, probably many of you will also be investing your money in SIP or RD. But do you know what is the difference between recurring deposit and systematic investment program?

In this article, we will tell you the difference between recurring deposit and systematic investment program? How are these two different plans from each other and which of the two will be the best to generate wealth for you?

We are going to tell you all this in this article, so all of you are requested to read this article completely from beginning to end and do not skip anywhere.

What is a Recurring Deposit?

Friends Recurring Deposit is also called RD in short form. Recurring deposit is such a plan, in which your wealth (wealth) increases very quickly.

This service is best for those people whose monthly income is very less, but still they want to make their wealth (wealth) by saving a small amount every month.

In today’s date every person who wants to open recurring deposit account. He can do this work very easily by himself sitting at home.

You can open recurring deposit account through internet. This service is provided to you by every bank that today uses net banking for its banking service.

You are not given exemption on Income Tax in Recurring Deposit, this service is especially for those people. Whose monthly salary is less but still they want to save a small amount every month.

If we talk about deposit, how much money we have to deposit. So let us tell you that you can invest in RD with a minimum of Rs 500 every month.

You will deposit a fixed amount every month in the recurring deposit. You will also continue to get interest on the same amount, you can do this for a long time period.

When you open recurring deposit account, at the same time you have to select its time period as well. For how many years, months or days you want to do RD, when your time period is completed.

So both your invested money and the interest received on it are transferred to your bank account. There will be many such people among you friends who must be thinking that why we should RD 500 rupees every month.

When we get lump sum money, we will get those money fixed as fixed deposit. But I want to ask you that those people whose salary is at least 10000/- per month.

Can they ever get lakhs of rupees in a lump sum, suppose they have got that money by selling land or something else. But you should not forget that after that you also have to wait for a long period.

Whereas in RD you are investing a small amount every month and at the same time your time period is also passing. If you do RD for five years, 500 rupees, then exactly after 5 years you will get all that money.

To open a recurring deposit account, you can deposit 100 to 1 lakh rupees every month. With this, the time of deposit is 6 months and up to 10 years. You get an interest of 6.5 to 11% on this amount.

What is (SIP) Systematic Investment Plan?

The full name of SIP is Systematic Investment Plan, SIP is an option to invest in any mutual funds. Through which you have to invest a fixed amount in the Mutual Fund of your choice at a certain interval. If seen, SIP is similar to Recurring Deposit i.e. RD,

In which you have to put some small amount every month. SIP works on regular and continue investment principle, instead of investing lump sum amount in mutual funds, SIP gives you the option to invest by dividing that amount into several parts.

Because most of the people in our country either belong to the middle class or from the lower middle class, so it is very difficult for them to have a lump sum amount.

For example, if you want to invest Rs 10000 in mutual funds, then you do not need to deposit Rs 10000 in one go. Rather, you can invest only 1000 rupees every month by dividing 10000 rupees into 10 parts.

By doing this you are able to invest in your Mutual Fund without affecting your other financial responsibilities.

Difference Between Systematic Investment Plan(SIP) and Recurring Deposit (RD)

  • Whether it is SIP or RD, you have to invest a fixed amount every month.
  • Through SIP you can invest in mutual funds, while through RD you deposit in any bank.
  • If you invest your money in the form of RD, then in this you will get 5.75 – 7.25% P.A. interest rate can be obtained.
  • Same if you invest your money through SIP, then there are many such mutual funds. Those who gave 12 – 15.5% P.A. to the investors i.e. people. return is given.
  • You should remember that the money invested in mutual funds through SIP is linked to the share market. If the share market falls then your money will also sink but it is a safer way than investing in direct share market.
  • If you do RD, then you do not have any kind of risk in it, because your investment gets fixed in the bank for a period of time.
  • You can start SIP by paying a minimum investment of Rs 500 every month. While RD you can start with a minimum of Rs 100.
  • If your SIP is in mutual fund, then after 1 year if you redeem your investment then no tax will be applicable. If you redeem within a year, then you have to pay flat 15% tax.
  • Whatever interest income you earn from RD in RD is taxable according to your tax slab. Whenever this tax slab income exceeds 10,000, the bank deducts TDS from you at the rate of 10%.
  • There is high risk in SIP because its money is invested in the share market through mutual funds.
  • If you do RD, then there is no risk to your money in this.
  • By depositing money in RD, you can fulfill your short term goals.
  • Whereas through SIP you can achieve short term goals as well as long term goals.

Disclaimer: Mutual Fund Investments Are Subject to Market Risk. Read All Scheme Related Documents And Information Carefully Before Investing.

Hope friends, you must have liked this article as well as you must have got almost every kind of information related to SIP and Recurring deposit.

If you liked this article then share it with your friends on social media. So that your friends can also improve themselves financially and learn about investing.

Also, tell as many of your friends as possible about this website of ours. So that he can also come here and grow his financial IQ by reading articles related to investment.

If you have any question or want to give any suggestion to us, then you can ask in the comments below. Apart from this, you can follow us on social media pages.

If you are new to our website, then you are requested to subscribe to our website first. So that the information of our latest post can be sent to you through email.

Here Read more article…..

Leave a Comment