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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
    • Kotak Personal Loan
      "GOOD SERVICE"
      KOTAK MAHINDRA BANK
      0.5 4.0/5 "Great!"
      It was a good experience with KOTAK for my personal loan service they provide me with a good interest rate 13 % which is nice compare to others in the market and the documents have been collected from my door step and the payments where through ecs it was a awesome service from KOTAK for my personal loan service.
      Was this review helpful? 0
      , ahmedabad
      Reviewed on Nov 17, 2017
    • HDFC Bank Saving Account
      "Good account to use"
      HDFC BANK
      0.5 4.0/5 "Great!"
      I am having the HDFC bank savings account for more than 7 years. The customer support is good with the HDFC bank. I use the net banking with HDFC bank which is easy to use and user friendly. The IMPS charges are average with HDFC bank, I would like to say the IMPS charges need to be come in an offer basis.
      Was this review helpful? 0
      , ahmedabad
      Reviewed on Nov 17, 2017
    • HDFC Bank Car Loan
      "Good service"
      HDFC BANK
      0.5 4.5/5 "Excellent!"
      The car loan service is excellent with HDFC bank, they have disbursed the car loan within a day time. The required loan amount has been given and I am satisfied with it. The rate of interest is as per the market. The processing fee and the charges were decent,but for the collection of documents they have charged Rs,1200 .
      Was this review helpful? 0
      , ahmedabad
      Reviewed on Nov 17, 2017
    • Bank Bazaar Personal Loan
      "GOOD SERVICE"
      CITIBANK
      0.5 4.0/5 "Great!"
      I applied with Bankbazaar.com website which was easy to use and it was been recently I came to know about the service of Bankbazaar.com and the customer service was fine compare to others in the market ,it was a good experience with Bankbazaar.com.
      Was this review helpful? 0
      , ahmedabad
      Reviewed on Nov 17, 2017
    • Citibank Personal Loan
      "Excellent service"
      CITIBANK
      0.5 5.0/5 "Blown Away!"
      I have applied for a personal loan with CITI bank the service was very good with CITI bank but I was not required with the loan service currently they quoted me with a better interest rate and the customer service was also good it was totally a good experience with CITI for my personal loan service.
      Was this review helpful? 0
      , ahmedabad
      Reviewed on Nov 17, 2017
    • Bank Bazaar Personal Loan
      "Excellent"
      KOTAK MAHINDRA BANK
      0.5 5.0/5 "Blown Away!"
      The services are good at Bankbazaar and the process was fast and convenient. They were excellent in the communication and they were on time right the process. The website is also good and it is convenient for the customer to get the deals that are satisfactory.
      Was this review helpful? 0
      , kolkata
      Reviewed on Nov 17, 2017
    • review Saving Account
      "Average service"
      CENTRAL BANK OF INDIA
      0.5 3.0/5 "Satisfactory"
      I had my salary account with Central bank of India. I had this account as my salary account for around 2 to 3 years. There is no ATM facility available with this bank and branches are also less so I migrated my salary account to HDFC bank. If they really want to stick with their customers then they have to improve in lot of areas.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Nov 17, 2017
    • Kotak Credit Card
      "Average card to use"
      KOTAK MAHINDRA BANK
      0.5 4.0/5 "Great!"
      The credit services charges are very high with Kotak mahindra credit card. I got the credit card with Kotak mahindra for past 2years. The customer support is not giving the proper response with the credit card department as well . I am satisfied with the credit limit. The service charges are very high with this card.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Nov 17, 2017
    • Citibank Personal Loan
      "GOOD SERVICE"
      CITIBANK
      0.5 4.0/5 "Great!"
      It was been eight months I using the personal loan service from CITI bank they offered me a loan amount of 1.82 lakhs. The customer service was good compare to others they offered me a interest rate of 13.49 which was fine compare to others it was a good experience with CITI bank for my personal loan service.
      Was this review helpful? 0
      , new delhi
      Reviewed on Nov 17, 2017
    • Bank Bazaar Personal Loan
      "GOOD SERVICE"
      STANDARD CHARTERED BANK
      0.5 4.0/5 "Great!"
      Bankbazaar.com provides me a very good service it was been two years I came to know about Bankbazaar.com. I applied through Bankbazaar.com website which was easy to use and the customer service was prompt it was totally a awesome experience with Bankbazaar.com.
      Was this review helpful? 0
      , new delhi
      Reviewed on Nov 17, 2017
    • Kotak Saving Account
      "Customer support need to be improved"
      KOTAK MAHINDRA BANK
      0.5 4.0/5 "Great!"
      I am banking with Kotak mahindra for past 3 years. The customer support is not up to the mark with kotak mahindra. The customer support need to be give proper response to the customers. They need to focus on the follow up part. I use the net banking service with Kotak mahindra which is good to use.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Nov 17, 2017
    • Standard Chartered Bank Personal Loan
      "GOOD SERVICE"
      STANDARD CHARTERED BANK
      0.5 4.0/5 "Great!"
      STANDARD CHARTERED bank provides me a very good service regarding my personal loan service but their executives rejected my loan process as because my salary account was not under banks criteria they quoted me interest rate of 14.49 which is fine compare to others also the customer service was fine it was a average service from STANDARD CHARTERED for my personal loan service.
      Was this review helpful? 0
      , new delhi
      Reviewed on Nov 17, 2017
    • Bank Bazaar Personal Loan
      "Good service can be imporved"
      KOTAK MAHINDRA BANK
      0.5 4.0/5 "Great!"
      I got the call within a time after I have applied for the personal loan with bank bazaar, it would be great if they can give quick response. The follow up need to be focused with bank bazaar team. I know bank bazaar for more than a year. I use bank bazaar mobile application which is easy to use and customer friendly. The data base questions can be reduced with bank bazaar team.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Nov 17, 2017
    • Kotak Personal Loan
      "Average service"
      KOTAK MAHINDRA BANK
      0.5 3.0/5 "Satisfactory"
      My personal loan got approved with Kotak mahindra bank. The customer support gave me quick response in regards to my personal loan application and I would like to suggest the same response need to be given to all other customers. The rate of interest and the charges are low with Kotak mahindra
      Was this review helpful? 0
      , hyderabad
      Reviewed on Nov 17, 2017
    • Citibank Saving Account
      "Excellent service"
      CITIBANK
      0.5 5.0/5 "Blown Away!"
      I maintain the savings account with Citibank for more than 8months. The customer support is excellent with Citibank. I use the net banking with Citibank , it is very easy to use and very comfortable to transfer the funds immediately. I am happy banking with Citibank.
      Was this review helpful? 0
      , new delhi
      Reviewed on Nov 17, 2017
    • Bank Bazaar Personal Loan
      "Average service"
      CITIBANK
      0.5 3.0/5 "Satisfactory"
      The bank bazaar customer support need to give immediate response to the customers. I know bank bazaar for more than 5 years. I used bank bazaar website while applying for the personal loan which is easy to use and customer friendly. The service can be made customer cetric.
      Was this review helpful? 0
      , new delhi
      Reviewed on Nov 17, 2017
    • Citibank Personal Loan
      "Disappointed service"
      CITIBANK
      0.5 3.0/5 "Satisfactory"
      I have given all the details to the Citibank , but I haven't got any response from Citibank in regards to my personal loan application and I got disappointed with their bank service. The rate of interest and the charges are low with Citibank when compare with others.
      Was this review helpful? 0
      , new delhi
      Reviewed on Nov 17, 2017
    • Kotak Personal Loan
      "Overall good"
      KOTAK MAHINDRA BANK
      0.5 4.0/5 "Great!"
      Kotak Mahindra Bank is excellent in the personal loan process and they were on time as well and with minimum effort the money came in to my account. The rate of interest is a bit high. It was around 14% for the tenure of five years. I asked for 3 years though. The processing charges was waive off.
      Was this review helpful? 0
      , kolkata
      Reviewed on Nov 17, 2017
    • HDFC Bank Credit Card
      "Average card to use"
      HDFC BANK
      0.5 4.0/5 "Great!"
      As I had my salaried account first with HDFC bank and still maintaining the account as my savings account for 15 years they offered me a credit card and I accepted and took it from them. Annual charges is free for first 2 years then they charged me Rs. 500 for annual charges. Limit enhancement is not up to the mark. Used the card between 10 to 11 years.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Nov 17, 2017
    • SBI Saving Account
      "Average service"
      STATE BANK OF INDIA
      0.5 3.0/5 "Satisfactory"
      Initially I got the State bank of Mysore savings account but at present it got changed to SBI. The customer support was average with SBI when compare with SBM. The rate of interest and the charges are high with SBI when compared with other others. They need reduce their interest rate and the additional charges with the credit card.
      Was this review helpful? 0
      , bangalore
      Reviewed on Nov 17, 2017
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