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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.

    RD VS SIP

    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
    • ICICI Bank Personal Loan
      "Not Satisfied with the services"
      ICICI BANK
      0.5 1.0/5 "Really Bad"
      I have a earlier experience with ICICI Bank for the personal loan. It has not been a very good experience. The documentation was too much to submit. The rate of interest was very high. It was around 15%. The processing charges was pretty high as well.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Aug 14, 2017
    • review Other Loan
      "Very good customer support"
      JAMMU AND KASHMIR BANK
      0.5 5.0/5 "Blown Away!"
      Since past 10 years I am using Jammu & Kashmir savings account. The customer support is very good with J & K bank. They way they give response to the customer is really good with J & K. They have offered me credit card Personal loan but I didn't take it. I am happy and satisfied using jammu and kashmir savings account .
      Was this review helpful? 0
      , srinagar
      Reviewed on Aug 14, 2017
    • HDFC Bank Personal Loan
      "Excellent Service"
      HDFC BANK
      0.5 5.0/5 "Blown Away!"
      The HDFC bank executives has disbursed my personal loan within 24 hours. I have applied the personal loan through HDFC net banking, The executive came and collected the documents.they have disbursed the loan within 24 hours of time. The required loan amount has been given and I am satisfied with it. The rate of interest is high with HDFC personal loan.
      Was this review helpful? 0
      , srinagar
      Reviewed on Aug 14, 2017
    • SBI Cards Credit Card
      "Excellent"
      SBI CARDS
      0.5 5.0/5 "Blown Away!"
      My credit card is with State Bank of India. I am more than satisfied with the deals I get on the credit card and it has been perfect till date. The credit limit is also good and the bank has always been on time to send me the details and the billing dates is also convenient for me.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Aug 14, 2017
    • HDFC Bank Credit Card
      "Very good card to use"
      HDFC BANK
      0.5 5.0/5 "Blown Away!"
      The HDFC bank money back card is easy to use . I use this card to pay the utility bills for shopping . The customer service with HDFC bank is very good, the rate of interest is nominal wuith HFFC bank. I am happy with the credit limit with HDFC bank.
      Was this review helpful? 0
      , srinagar
      Reviewed on Aug 14, 2017
    • HDFC Bank Saving Account
      "Excellent Service"
      HDFC BANK
      0.5 5.0/5 "Blown Away!"
      The HDFC bank salaried account is with me for past 6 years. The customer support is very good with HDFC bank. The rate of interest is low with HDFC when compared with others. The HDFC bank also offered me a credit card as well the personal loan. I am happy using the HDFC bank services.
      Was this review helpful? 0
      , srinagar
      Reviewed on Aug 14, 2017
    • Bank Bazaar Customer Support
      "Excellent Service"
      ICICI BANK
      0.5 5.0/5 "Blown Away!"
      The bank bazaar handles the customer in professional way and they fulfill the customers requirement. The customer support has the very good process with bank bazaar. The website of bank bazaar is easy to use and user friendly. I am satisfied using the bank bazaar website.
      Was this review helpful? 0
      , srinagar
      Reviewed on Aug 14, 2017
    • Bank Bazaar Customer Support
      "Excellent Service"
      ICICI BANK
      0.5 5.0/5 "Blown Away!"
      The bank bazaar handles the customer in professional way and they fulfill the customers requirement. The customer support has the very good process with bank bazaar. The website of bank bazaar is easy to use and user friendly. I am satisfied using the bank bazaar website.
      Was this review helpful? 0
      , srinagar
      Reviewed on Aug 14, 2017
    • ICICI Bank Personal Loan
      "Good Service"
      ICICI BANK
      0.5 4.0/5 "Great!"
      I am not in need of any kind of loan at present so that was the reason I haven't proceed with ICICI bank personal loan . The Customer service is good with ICICI bank. They also gave good response in concern to my personal loan application. The rate of interest of interest was nominal with ICICI bank. I got good service from ICICI bank.
      Was this review helpful? 0
      , srinagar
      Reviewed on Aug 14, 2017
    • Bank Bazaar Customer Support
      "Approachable "
      KOTAK MAHINDRA BANK
      0.5 5.0/5 "Blown Away!"
      It was absolutely good with bankbazaar. Nothing went wrong with bankbazaar for the loan process. I got proper assistance from them. I got the loan from Kotak bank with the support of bankbazaar. Everything was good and the service is completely approachable.
      Was this review helpful? 0
      , pune
      Reviewed on Aug 14, 2017
    • Kotak Personal Loan
      "Good Customer Service"
      KOTAK MAHINDRA BANK
      0.5 4.5/5 "Excellent!"
      To be frank, interest rate is not really good but it is ok. Kotak Mahindra bank offered a personal loan last month. I do not have any dissatisfaction with the bank for the loan process but it would be more convenient if the interest rate is bit less. Customer service is good.
      Was this review helpful? 0
      , pune
      Reviewed on Aug 14, 2017
    • HDFC Bank Personal Loan
      "High interest rate"
      HDFC BANK
      0.5 3.0/5 "Satisfactory"
      I was looking for balance transfer from HDFC to other banks. The actual reason for I transferred my personal loan to other bank is because of the high interest rate. HDFC bank quoted 16% of interest rte which is high for the personal loan, so I done balance transfer.
      Was this review helpful? 0
      , rajahmundry
      Reviewed on Aug 14, 2017
    • Bank Bazaar Customer Support
      "Immediate Response"
      FULLERTON
      0.5 4.0/5 "Great!"
      I glad to say that I had received a quick response from bankbazaar. Actually I was trying to apply for the personal loan online, immediately I had received a response from bankbazaar end. Moreover, they ensured that whether I want anymore information about the loan process.
      Was this review helpful? 0
      , rajahmundry
      Reviewed on Aug 14, 2017
    • SBI Saving Account
      "Best bank"
      STATE BANK OF INDIA
      0.5 5.0/5 "Blown Away!"
      State Bank of India has been good overall in the banking services. The overall experience is good. I hold a savings account and the banking online is also good and there are no charges taken for any of the account features. The services at the branch is also good.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Aug 14, 2017
    • Fullerton Personal Loan
      "Interest rate is high"
      FULLERTON
      0.5 3.0/5 "Satisfactory"
      What I feel about Fullerton is the rate of interest is little bit higher than the other banks. Especially when I compared with ICICI bank, Fullerton is on higher side. Other than the rate of interest, rest of the services are quite good and appreciable.
      Was this review helpful? 0
      , rajahmundry
      Reviewed on Aug 14, 2017
    • Bank Bazaar Customer Support
      "Very good services"
      STANDARD CHARTERED BANK
      0.5 5.0/5 "Blown Away!"
      The services at Bankbazaar has been good and the overall experience is fine. It was a very nice process to get the best rates as per the eligibility. The website is very helpful as it is informative with the information of all the banks at one single page.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Aug 14, 2017
    • Standard Chartered Bank Personal Loan
      "Excellent"
      STANDARD CHARTERED BANK
      0.5 5.0/5 "Blown Away!"
      I have taken my personal loan from Standard Chartered Bank and it was a very good experience. It was a on time process and the disbursement was also as needed. I received a rate of interest of around 11.5% and the processing charges was waived off.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Aug 14, 2017
    • SBI Cards Credit Card
      "Average card to use"
      SBI CARDS
      0.5 4.0/5 "Great!"
      To reach the customer service with State bank we need to talk to IVR for a long time and it takes minimum 15 minutes time to reach the executive and After all this struggle once we reach the executive they will keep our call on hold. The customer support need to improved with SBI. I use the SBI simply save card for past 3 years. I pay the annual fee of Rs.500. I am satisfied with the credit limit but not with the service.
      Was this review helpful? 0
      , bangalore
      Reviewed on Aug 14, 2017
    • HDFC Bank Credit Card
      "Good Card to use"
      HDFC BANK
      0.5 5.0/5 "Blown Away!"
      The Customer service is really good with the HDFC bank credit card department. I am holding the HDFC bank credit card for more than 5 years. I am getting the benefits like reward points, cash back offers with this card, but I don't redeem those points. I am satisfied with the credit limit.
      Was this review helpful? 0
      , bangalore
      Reviewed on Aug 14, 2017
    • HDFC Bank Saving Account
      "Fantaballous banking service"
      HDFC BANK
      0.5 5.0/5 "Blown Away!"
      The service with HDFC bank is very transparent. The customer service and executives are very clear about their products. I am having the salaried account with HDFC bank for past 8 to 9 years. The rate of interest is low with HDFC bank. The net banking with HDFC bank is really good and it is easy to use.
      Was this review helpful? 0
      , bangalore
      Reviewed on Aug 14, 2017
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