FD vs RD: On investment of Rs 5 lakh which scheme offers better returns, see detailed comparison
Compare FD and RD on a Rs 5 lakh investment. Learn about maturity benefits, interest rates, tax advantages, and returns to make an informed choice between these secure savings options.
When it comes to secure savings, Fixed Deposits (FD) and Recurring Deposits (RD) are among the most popular options. But which one yields better returns on an investment of Rs 5 lakh? This guide dives into the features, interest rates, maturity benefits, and tax advantages of both schemes. Whether you're seeking long-term growth or flexibility in deposits, understanding these options will help you decide which aligns best with your financial goals. Explore the comparison to make an informed decision!
(Disclaimer: This is not investment advice. Do your own due diligence or consult an expert for financial planning)
FD (Fixed Deposit)
Who Can Open
A single adult.
Joint Account (up to 3 adults) - Joint A or Joint B.
A guardian on behalf of a minor or a person of unsound mind.
A minor above 10 years in their own name.
Note: Any number of accounts can be opened.
A single adult.
Joint Account (up to 3 adults) - Joint A or Joint B.
A guardian on behalf of a minor or a person of unsound mind.
A minor above 10 years in their own name.
Note: Any number of accounts can be opened.
Deposits
- Account types: 1-year, 2-year, 3-year, and 5-year options.
- Minimum deposit: Rs 1,000 (multiples of Rs 100).
- No maximum investment limit.
- Interest: Payable annually, not compounded.
- 5-year TD qualifies for Section 80C benefits under the Income Tax Act, 1961.
Maturity
Deposit is repayable after 1, 2, 3, or 5 years, based on account tenure.
Extension of Account
- Accounts can be extended for the original tenure after maturity by applying within the prescribed period.
- Interest rates applicable at the time of maturity apply to the extended tenure.
Premature Closure
- No withdrawal within six months.
- After six months and before one year: Savings account interest rate applies.
- After one year: 2% lower interest than the applicable TD rate.
Pledging of Account
Can be pledged as security to authorized institutions (e.g., banks, corporations).
Your Return on Rs 5 Lakh Investment
- Invested Amount: Rs 5,00,000.
- Estimated Returns: Rs 2,24,974.
- Total Value: Rs 7,24,974.
RD (Recurring Deposit)
Interest Payable
Effective from 01.01.2024: 6.7% per annum, compounded quarterly.
Deposits
- Minimum: Rs 100/month (multiples of Rs 10).
- No maximum limit.
- Can deposit via cash or cheque.
Your Return on Rs 5 Lakh Investment
- Invested Amount: Rs 4,99,980.
- Estimated Returns: Rs 94,709.
- Total Value: Rs 5,94,689.