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  • 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 Deposits 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.

    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.

    Interest rates for recurring deposits 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

    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.
    Recurring Deposit - Sitemap

    Customer Reviews

  • Page 1 of 50 1 2 3 4 5
    • SBI Saving Account
      "Good Bank"
      STATE BANK OF INDIA
      0.5 5.0/5 "Blown Away!"
      I have very long relation with SBI, its best bank in the market. Its a nationalized and traditional bank for my family. Its was my zero balance account. It has many branches and ATM all over my area. I am very much fine and happy to hold SBI account.
      Was this review helpful? 0
      , kolkata
      Reviewed on Jun 23, 2017
    • SBI Education Loan
      "Its Excellent"
      STATE BANK OF INDIA
      0.5 4.0/5 "Great!"
      I have taken the education loan in SBI around Rs. 3.25 lakhs with the interest rate of 13% for the tenure of five years, now my tenure has been increased and my EMI got reduced. I am very much fine with SBI, my whole family is using SBI service always.
      Was this review helpful? 0
      , kolkata
      Reviewed on Jun 23, 2017
    • Bank Bazaar Customer Support
      "Love to Use Bank Bazaar website"
      ICICI BANK
      0.5 4.0/5 "Great!"
      I am happy with Bank Bazaar, whatever the coordination which they gave is great. I love Bank Bazaar website always to use. Its very convenient to use and access. It has all options to check on financial needs. But I would like to suggest, Bank Bazaar executives should be more clear with their process.
      Was this review helpful? 0
      , kolkata
      Reviewed on Jun 23, 2017
    • ICICI Bank Personal Loan
      "Response part has to be improved"
      ICICI BANK
      0.5 2.0/5 "Expected more"
      Due to improper coordination from ICICI, the loan application got closed. From Bank end there was no response on right time. They reached me after three days of my request and collected the documents finally it got closed without any intimation.
      Was this review helpful? 0
      , kolkata
      Reviewed on Jun 23, 2017
    • IndusInd Bank Credit Card
      "Best card to use"
      INDUSIND BANK LTD
      0.5 5.0/5 "Blown Away!"
      I am having Indus Ind credit card for the past 1 year. The benefits like rewards points cash back offers and online offers are available with this card. I am happy with the credit limit. The interest rate is nominal with this card. The best the thing is free movie ticket reward points, and the low interest rate on cash transactions. I am happy to use this card.
      Was this review helpful? 0
      , lucknow
      Reviewed on Jun 23, 2017
    • IndusInd Bank Saving Account
      "Customer friendly account"
      INDUSIND BANK LTD
      0.5 5.0/5 "Blown Away!"
      I have a facility to choose my account number, locker number any thing I want with Indusind savings account. Its applicable for each and every Indusind customer. It is basically introduced because customer will bot forget there account or locker number. I am using this savings account for past 3 years. The service with INDUS IND bank is really good. The benefits like net banking and the mobile application is easy to use and user friendly and simplified to use as customer convenient. In most of the bank We have to visit the branches if we block the net banking or debit card. But with Indusind we have a option called unblock the net banking or the debit card , we have a option in the ATM machine itself.
      Was this review helpful? 0
      , lucknow
      Reviewed on Jun 23, 2017
    • Standard Chartered Bank Credit Card
      "Overall good"
      STANDARD CHARTERED BANK
      0.5 4.0/5 "Great!"
      I hold a credit card with Standard Chartered bank and the offers are good. I earn reward points but I am unable to redeem the points. The credit limit is of 32k, but I am needing a better limit on the card. The customer services and response is good and satisfactory.
      Was this review helpful? 0
      , ernakulam
      Reviewed on Jun 23, 2017
    • review Other Loan
      "Best trading account"
      ICICI BANK
      0.5 5.0/5 "Blown Away!"
      I was not able to carry out the ICICI bank trading, so that was the reason I have closed this demat account, It is a best platform in the brokerage field and still the brokerage is very high in the market compared to others. I was not able to trade much that was the reason I have closed it. I have used this account for past 2 years. The rate of brokerage is very high with ICICI Bank .
      Was this review helpful? 0
      , lucknow
      Reviewed on Jun 23, 2017
    • review Saving Account
      "Satisfied with the services"
      STANDARD CHARTERED BANK
      0.5 4.0/5 "Great!"
      I hold a savings account with Standard Chartered Bank and the banking services are good. The overall experience has been satisfactory and the phone banking is also good and easy to connect with. I do not get charged for any of the facilities I use.
      Was this review helpful? 0
      , ernakulam
      Reviewed on Jun 23, 2017
    • ICICI Bank Saving Account
      "Better savings account to use"
      ICICI BANK
      0.5 4.0/5 "Great!"
      I am having ICICI bank savings account and the service is really good. Its only bank which provides EMI option on its debit card itself. There debit card facilities are the premiums in the market in terms of their services and the facilities. I am using this savings account for past 6 years. The rate of interest is high with ICICI bank.
      Was this review helpful? 1
      , lucknow
      Reviewed on Jun 23, 2017
    • HDFC Bank Credit Card
      "Good to Use"
      HDFC BANK
      0.5 4.0/5 "Great!"
      I am using Diner club credit card, whenever I go for any tie up restaurant with the HDFC they are providing some cash back and also I get some reward points. I am happy with credit card service of HDFC. Bill are very transparent and clear about the transaction.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jun 23, 2017
    • ICICI Bank Credit Card
      "Better card to use"
      ICICI BANK
      0.5 4.0/5 "Great!"
      I have never used this ICICI CORAL credit card properly . I hold this ICICI coral card for past 3 years. When I was using this card I got the reward points, cash back offer and the payback card which is attached with this card. For every transaction I will be some loyalty points which is added to the payback card. I am happy about the credit limit. I am satisfied using this card .
      Was this review helpful? 0
      , lucknow
      Reviewed on Jun 23, 2017
    • HDFC Bank Credit Card
      "Better card to use"
      HDFC BANK
      0.5 4.0/5 "Great!"
      The HDFC bank All miles credit card carries benefits like reward points and cash back offers. The reward points can be redeemed as air tickets, which is very good offer. I am happy about the credit limit. The rate of interest is nominal with this card. I am satisfied using this card.
      Was this review helpful? 0
      , lucknow
      Reviewed on Jun 23, 2017
    • HDFC Bank Saving Account
      "Good account to use"
      HDFC BANK
      0.5 5.0/5 "Blown Away!"
      I am having HDFC bank account around past 4 years. Based on this savings account I got a instant personal loan with HDFC bank. I use net banking with HDFC bank which is really great and simplified way of working . I can change the E-mail I'd and mobile phone number with the help of HDFC bank portal.
      Was this review helpful? 0
      , lucknow
      Reviewed on Jun 23, 2017
    • review Consumer Durable Loan
      "Convenient to buy Home appliances"
      BAJAJ FINSERV
      0.5 5.0/5 "Blown Away!"
      I went to nearest showroom and purchase LG TV 49" worth Rs. 1.1 lakhs, I just paid the down payment Rs.26,500 remaining amount convert into an EMI with Bajaj Finserv then I got Bajaj EMI card with some credit limit its good.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jun 23, 2017
    • HDFC Bank Personal Loan
      "Instant loan "
      HDFC BANK
      0.5 4.0/5 "Great!"
      They have started a new process with the HDFC personal loan. We can apply the Personal Loan through net banking and we just need to apply the documents in the portal and within 15 hours they have provided me a credentials id & password where I have tracked my personal loan application . The loan got approved within 24 hours of time. The banking service is really good and giving instant service to the customers. I am happy about the loan amount. The required amount has been given by HDFC bank. The Value added service like vouchers and online purchasing offers were given. The rate of interest is nominal with HDFC bank.
      Was this review helpful? 0
      , lucknow
      Reviewed on Jun 23, 2017
    • Bank Bazaar Customer Support
      "Customer oriented service"
      ICICI BANK
      0.5 5.0/5 "Blown Away!"
      The bank bazaar gives a prompt response and the regular follow to their customers. I really appreciate the bank bazaar effort which was given to the customer in terms the service, follow up in any case. The customer service and the response is really good with bank bazaar. The bank bazaar web site is easy to use and user friendly.
      Was this review helpful? 0
      , lucknow
      Reviewed on Jun 23, 2017
    • HDFC Bank Personal Loan
      "They be clear about the percentage"
      HDFC BANK
      0.5 4.0/5 "Great!"
      HDFC charged me 14.75% of interest for the amount of Rs.5 lakhs it is higher side compared to other competitor. But Initially they committed they were providing around 11% but finally it was processed it for 14.75%, But I am happy with their service, they done fast loan. process. I would like to suggest them, to clear information about the interest rates.
      Was this review helpful? 0
      , bangalore
      Reviewed on Jun 23, 2017
    • Bank Bazaar Customer Support
      "Overall good"
      ICICI BANK
      0.5 4.0/5 "Great!"
      The customer services are good and very much satisfactory at Bankbazaar. I was contacted instantly and the process is smooth. The website is overall good, it would be better if there are more options of banks on the portal to choose from with a lesser rate of interest.
      Was this review helpful? 0
      , ernakulam
      Reviewed on Jun 23, 2017
    • ICICI Bank Personal Loan
      "Below average service"
      ICICI BANK
      0.5 1.0/5 "Really Bad"
      I haven't got any kind of response from the ICICI bank . It was me who took initiative and made a follow up with the ICICI bank executives to get the personal loan but still no one gave proper responsefrom ICICI bank, that was the reason I haven't proceed my personal loan application with ICICI bank. The rate of interest is bit high , when compared with others. I would say it was a below average service.
      Was this review helpful? 0
      , lucknow
      Reviewed on Jun 23, 2017
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