Post Office RD Vs Mutual Fund SIP: Which has given more return on Rs 12,500 monthly investment for 5 years; understand calculation
Post Office RD vs SIP in Best Debt Mutual Fund: Recurring deposit (RD) is a post office scheme where one can deposit on a monthly basis for 5 years. The scheme provides 6.7 per cent annual interest, which is compounded quarterly. On the other hand, a similar product among mutual funds that invests most of its money in debt and has an investment limit of 4 to 7 years is a medium to long term debt mutual fund. The best medium to long term mutual fund in terms of annualised SIP returns in 5 years is UTI Medium to Long Duration Fund - Direct Plan. In this write-up, learn about the features of post office RD and UTI Medium to Long Duration Fund - Direct Plan. Also know which of the options has given more on a Rs 12,500 monthly or Rs 1.50 lakh yearly investment.
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Post office RD
The scheme is known as National Savings Recurring Deposit Account (RD) or 5-Year Post Office Recurring Deposit Account (RD). It provides 6.7 per cent interest. One can invest a minimum of Rs 100 per month or any amount in multiples of Rs 10. There is no maximum limit for investment.
Post office RD
One can have a single or a joint account in the scheme. The scheme also provides the facility of advance deposits up to 5 years in an account. An RD account holder can also take a loan against RD deposits after 12 installments and when the account is continued for 1 year.
Post office RD
On completion of 5 years, the RD account can be extended for further 5 years. The account can also be retained up to 5 years from the date of maturity without deposit.
UTI Medium to Long Duration Fund - Direct Plan
The fund has given 8.56 per cent annaualised SIP returns in 5 years. The fund has assets under management (AUM) of Rs 301 crore, while its net asset value (NAV) is Rs 74.2787. Benchmarked against CRISIL Medium to Long Duration Debt A-III Index, the fund has given 6.91 per cent return since its launch in January 2013.
UTI Medium to Long Duration Fund - Direct Plan
At an expense ratio of 1.24 per cent, the fund has a minimum lump sum and SIP investment of Rs 500 each. The fund has 96.93 per cent of its investments in debt and 3.07 per cent in cash and cash equivalent. It holds securities in 11 funds and 19 categories.
UTI Medium to Long Duration Fund - Direct Plan
Its main holdings are equal GOI Sec 7.18 24/07/2037, GOI Sec 7.10 08/04/2034, Power Finance Corporation Ltd SR BS227B Debenture 7.77 15/04/2028, and LIC Housing Finance Ltd Fixed Deposits 7.67 15/04/2033.
Post Office RD Vs SIP in Best Debt Mutual Fund: What Rs 12,500 in each option has given in 5 years
In terms of post office RD, a Rs 12,500 monthly investment, or Rs 7.50 lakh overall, has given an estimated return of Rs 1,42,074 and an estimated maturity amount of Rs 8,92,074 in 5 years.
Post Office RD Vs SIP in Best Debt Mutual Fund: What Rs 12,500 in each option has given in 5 years
When it comes to UTI Medium to Long Duration Fund - Direct Plan, a Rs 12,500 monthly SIP in it has turned into Rs 9,30,508 in 5 years.
Thus we see that UTI Medium to Long Duration Fund - Direct Plan has outpaced post office RD.