Difference Between Recurring Deposit and SIP

Setting aside a fixed amount of money every month specifically for savings or investment is the best way to create wealth. Systematic Investment Program (SIP) in Mutual Funds and Recurring Deposit are two most popular ways to invest a fixed amount every month. In a SIP, the investor has to set aside small amounts of money either monthly or quarterly rather than having to invest a lump amount. In a Recurring Deposit scheme, a person deposits a fixed amount every month for a predefined period of time. At the end of the tenure, he gets back the interest and investment amount.

For people willing to invest a fixed amount every month rather than a single time investment of huge amount, opening a RD, PPF or starting a SIP are the most preferred options.

RD VS SIP
Recurring Deposit

SIP Vs RD - Product Structure

Recurring Deposits - In a Recurring Deposit scheme, the individual has to first choose the tenure and monthly deposit amount. Once the plan starts, the investor must deposit the amount every month over the tenure. Generally, the tenure varies from a minimum of 6 months and thereafter in addition of 3 months to a maximum tenure of up to 10 years. Recurring Deposit proves to be gentle on one’s pocket given that the investor decides the amount and also the risk is considerably low.

RD Interest Rates are decided based on the tenure and deposit amount. The rate of interest for recurring deposit generally varies from 7% to 8% and senior citizens are offered a higher rate of interest. Recurring Deposit accounts can be started at banks or post offices. Unlike SIP, in RD you will know how much to expect at the end of tenure. For example, if you want to save a corpus of Rs. 3 lakh for an international trip, you can use a RD Calculator to decide how much you have to deposit every month and for how many years to save Rs. 3 lakhs.

One of the main disadvantages of Recurring Deposits is the fact that it is not tax efficient. Interest income from RD is added to income for declaring tax liability and a TDS will be applicable on the RD interest if it exceeds Rs. 10,000.

Systematic Investment Plan - A SIP can be chosen by investing in mutual funds. In a SIP, the investor has to deposit a small sum every month or every quarter and the amount of investment can be as low as Rs. 500. If you choose a mutual fund scheme and invest in SIP, based on the plan that you have opted for they will allocate your money in debt or equity. In recent times, equity mutual funds have generated good returns which have been in excess of recurring deposit or fixed deposit schemes. The returns generated by SIP mutual funds have been around 12% to 22% in the last 5 to 10 years. One of the main disadvantages of SIP lies in the fact that even if you keep depositing the amount, nothing can be promised and if the stock markets crash, you might end up losing more than what you get. Also, you will have to hold the fund for a long time to get good returns.

Which is Better Systematic Investment Plan Or Recurring Deposit

Difference Between Recurring Deposit and SIP
Factors Recurring Deposit (RD) Systematic Investment Plan (SIP)
Investment Scheme In a RD scheme, you will have to invest in a deposit plan that will give you fixed rate of returns. You can also opt for flexible recurring deposit scheme if you are looking for more flexibility. In a SIP for mutual funds, you can choose between debt or equity type of funds depending on your risk capability.
Risk Factor Recurring Deposits are not prone to risks and is one of the safest form of investment. Returns that you can expect from the SIP are variable. There can be a risk of capital and returns depending on the stock market. But, recent data shows us the SIP gives good returns if held for a long period of time.
Investment Type In a Recurring deposit scheme, the investor has to deposit a fixed amount every month. Systematic Investment Plan is a way to put your money on mutual funds. Investment can be done on a periodic basis - daily, weekly, monthly or quarterly.
Returns As the rate of interest is fixed in a recurring deposit scheme, the return is also fixed and known at the time of investment. The returns from a SIP for mutual funds is dependent on debt and equity markets and is also based on the fund scheme chosen by the investor.
Liquidity Recurring Deposit is liquid but premature withdrawal or closure will attract penalty charges. In terms of liquidity, a SIP is better when compared to RD. SIP can be closed and the money can be withdrawn without any penal charges.
Taxation Recurring Deposit amount or the interest earned on it are not exempted from tax. SIP investments and returns are exempted from tax only when invested on Equity Linked Savings Scheme (ELSS) funds.
Instalment Frequency Recurring Deposit usually come with monthly instalments SIPs offer flexible instalment plans of daily, weekly, monthly, quarterly etc.
Investment Goal Recurring Deposits usually serve short-term savings goal and do not help in long-term wealth growth. SIPs can help in all kinds of investments goals, whether short- or long –term, depending on the frequency of investment, funds chosen and other factors.

Display of any trademarks, tradenames, logos and other subject matters of intellectual property belong to their respective intellectual property owners. Display of such IP along with the related product information does not imply BankBazaar's partnership with the owner of the Intellectual Property or issuer/manufacturer of such products.

Customer Reviews

Page 1 of 50 1 2 3 4 5
  • review Personal Loan
    "Need to decrease interest rate "
    BAJAJ FINANCE LIMITED
    0.5 4.0/5 "Great!"
    BAJAJ FINANCE has offered a pre approved personal loan offer and I accepted for the same. I have taken this loan 2 months back. The process was smooth and submitted required docuemtns within 1.5 hrs amount was credited to my account with 1.64L with tenure period of 4 years. The rate of interest is 18% which is high. Fee was deducted of 9K. There is pre closure option after 30 days with charge of 4%. EMI need to pay the amount of 4K. The best which I would like to say is online process was done with short term.
    Was this review helpful? 37
    , chennai
    Reviewed on Mar 21, 2020
  • ICICI Bank
    ICICI Bank Personal Loan
    "Good service"
    ICICI BANK
    0.5 5.0/5 "Blown Away!"
    The tenure for ICICI personal loan is for 3 years, I have taken the loan for some personal purposes. I got my loan statements on time but the interest rate of the loan is 12% which is bit high for me. I wish the bank can reduce it up to 10%. Otherwise everything is good about the loan.
    Was this review helpful? 25
    , hyderabad
    Reviewed on Mar 21, 2020
  • RBL Bank Credit Card
    "Easy to convert for EMI "
    RATNAKAR BANK
    0.5 4.0/5 "Great!"
    I got RBL card offer from BAJAJ Finance. I have been using this card past 10 months which is a life time free card. The credit limit is sufficient of 55K. EMI conversion is avail and I can convert via mobile app whenever required with nominal charge. I use this card for general purpose. Based on usage I get points but not yet redeem it.
    Was this review helpful? 80
    , chennai
    Reviewed on Mar 21, 2020
  • SBI Cards Credit Card
    "Good service"
    SBI CARDS
    0.5 4.0/5 "Great!"
    SBI credit card have offers and reward points but I have not redeem them yet, this is a domestic card, the credit limit is of 50000 which I am very much satisfied as per my need. I got my statement on time. I used this card for personal purposes.The card is very user friendly.
    Was this review helpful? 85
    , hyderabad
    Reviewed on Mar 21, 2020
  • SBI Cards Credit Card
    "Ok service"
    SBI CARDS
    0.5 5.0/5 "Blown Away!"
    I am using SBI credit card for more than three months, there are some reward points and offers in the card. I used this card for online shopping, fuel surcharge and groceries.The credit limit of the card is sufficient and I like the most about the card is that it is a life time free card and very good to use.
    Was this review helpful? 78
    , hyderabad
    Reviewed on Mar 21, 2020
  • IndusInd Bank Credit Card
    "Ok service"
    INDUSIND BANK LTD
    0.5 5.0/5 "Blown Away!"
    The bank agent suggest me to take credit card from INDUSIND and I have taken it because it doesn't have any annual fee. The offer and reward points are available in the card are good. I am satisfied with the limit of the card. I used the card for general purposes. But it will be nice, if the offers and reward points will be more.
    Was this review helpful? 62
    , jaipur
    Reviewed on Mar 21, 2020
  • IndusInd Bank Credit Card
    "Good service"
    INDUSIND BANK LTD
    0.5 5.0/5 "Blown Away!"
    I am using INDUSIND credit card for 3 months. The card have no offers available and also there is no rewards. The only benefit is that its a life time free card and the credit limit is only for 75000 I am not that satisfied as i expected to get around 1.5 lakh. Apart from the limit over all experience is good.
    Was this review helpful? 61
    , chennai
    Reviewed on Mar 21, 2020
  • IndusInd Bank Credit Card
    "Excellent card"
    INDUSIND BANK LTD
    0.5 5.0/5 "Blown Away!"
    I have got INDUSIND credit card few months ago and I have used it for two months now ,the credit limit of the card is Rs.70000 which is a life time free card. The bank have informed me every details about the reward points and offers but I have not got any time check it. I am satisfied with their card service.
    Was this review helpful? 62
    , hyderabad
    Reviewed on Mar 21, 2020
  • ICICI Bank Credit Card
    "Good service"
    ICICI BANK
    0.5 5.0/5 "Blown Away!"
    Am having ICICI credit card for two years, I feel good and have not face any issues. The best part about the card is its a life time free card. I used to get my card statement on time. I used this card for shopping, groceries and for many other personal purposes.I am using the bank mobile app which function smooth and simple.
    Was this review helpful? 76
    , faridabad
    Reviewed on Mar 21, 2020
  • SBI Cards Credit Card
    "Good service"
    SBI CARDS
    0.5 5.0/5 "Blown Away!"
    I have used SBI credit card for 2-3 months, but I have not got any time to check about the offers available in the card. The limit of the card is 38000 and I am satisfied because its a life time free card. I used to get my card statement on time and the net banking is also working very well.
    Was this review helpful? 81
    , faridabad
    Reviewed on Mar 21, 2020
  • IndusInd Bank Credit Card
    "Good service "
    INDUSIND BANK LTD
    0.5 4.0/5 "Great!"
    Since it is a life time free card offer from INDUSIND so I chosen it and applied through online. I received a call on time and they have done the verification process. Hence I received the card by 7 days, the credit limit is okay for me. Its easy to use for all purposes.
    Was this review helpful? 59
    , chennai
    Reviewed on Mar 21, 2020
  • Citibank Credit Card
    "Good "
    CITIBANK
    0.5 4.0/5 "Great!"
    CITI has provided good offers and benefits on 2 months before. So I chosen this card and applied through online. It is annual fee chargeable of 500 rupees bu there is waiver off option if I spend 30K within a year. The credit limit is 65K. There is EMI conversion avail for this card.
    Was this review helpful? 58
    , coimbatore
    Reviewed on Mar 21, 2020
  • HDFC Bank Credit Card
    "very good"
    HDFC BANK
    0.5 5.0/5 "Blown Away!"
    I have used credit card from HDFC bank for 1 year which is very good and also very comfortable, its a life time free card and lots of offers are available in the card. This card was suggested to me by my colleague. Mobile banking also functions very smooth.
    Was this review helpful? 88
    , bangalore
    Reviewed on Mar 21, 2020
  • IndusInd Bank Credit Card
    "Average service"
    INDUSIND BANK LTD
    0.5 4.0/5 "Great!"
    INDUSIND bank credit card have an credit limit of of Rs.75000, there is no offers available in the card and it also have a charges of 3000 along with GST. I hardly receive any remainder messages for my bill payment due to that some time I could not pay my bill on time. I would advise them send my bill on time before the due date.
    Was this review helpful? 60
    , bangalore
    Reviewed on Mar 21, 2020
  • Axis Bank Car Loan
    "Average"
    AXIS BANK
    0.5 4.0/5 "Great!"
    Through showroom got suggestion to take a car loan from AXIS bank. I taken this loan on 3 years back. I got the loan amount of 4L with tenure period of 4 years. The rate of interest was okay. I done the down payment of around 1.5L. EMI need to pay of 10,500 rupees. The car model is Swift Dzire. I taken for commercial purpose based on amount which I get on monthly doing the EMI payment.
    Was this review helpful? 36
    , kolkata
    Reviewed on Mar 21, 2020
  • ICICI Bank Credit Card
    "Need to increase the credit limit "
    ICICI BANK
    0.5 5.0/5 "Blown Away!"
    I have been using ICICI card for more than one year. They have provided an annual fee chargeable card and waiver off option is applicable. The credit limit is okay of 50K. Since I need to do purchase about 45K on some of the month so this limit is not sufficient. I swipe the card for travel, shopping and fuel purposes. I have not opted for EMI conversion.
    Was this review helpful? 62
    , kolkata
    Reviewed on Mar 21, 2020
  • Axis Bank Credit Card
    "Good card"
    AXIS BANK
    0.5 4.0/5 "Great!"
    I have been using AXIS bank credit card for 3 years, Its a life time free card so I applied the card through bank. The agent have informed me everything about the card. I used to get offers of 10% on petrol bunk and shopping.The limit of the card is Rs.45000 and I used to pay my bill directly through bank.I am also using their net banking which is very good.
    Was this review helpful? 80
    , kolkata
    Reviewed on Mar 21, 2020
  • IndusInd Bank Credit Card
    "Good service"
    INDUSIND BANK LTD
    0.5 4.0/5 "Great!"
    I got INDUSIND credit card from few months ago.The card have an EMI conversion. I used the card for multi purposes like shopping, online payment, ticket booking. This is annually chargeable card, I am not satisfied with the credit limit of Rs.75000 as I am expecting more than than 1 lakh.
    Was this review helpful? 65
    , kolkata
    Reviewed on Mar 21, 2020
  • IndusInd Bank Credit Card
    "Excellent"
    INDUSIND BANK LTD
    0.5 5.0/5 "Blown Away!"
    I got a life time free card offer from INDUSIND bank hence applied through online on three months back. I received the call on time and the process was done on smooth. I got the card on exact time frame. The credit limit is sufficient and they provided good offers and benefit as well.I use this card for shopping and travel purpose.
    Was this review helpful? 53
    , kolkata
    Reviewed on Mar 21, 2020
  • RBL Bank Credit Card
    "Average service"
    RATNAKAR BANK
    0.5 1.0/5 "Really Bad"
    RBL credit card is a chargeable card, I always have to go to Bajaj Finance to pay my credit card bill. I am not satisfied with the customer service which has to be improved. I used this card when ever needed for shopping, fuel surcharge and bill payment.The limit of the card is fine.
    Was this review helpful? 87
    , ranchi
    Reviewed on Mar 21, 2020
Common Loader Icon
Page 1 of 50 1 2 3 4 5
reTH65gcmBgCJ7k
This Page is BLOCKED as it is using Iframes.