Post Office RD Vs SIP in Best Debt Mutual Fund: Where will you get more profit on Rs 10,000 monthly investment for 5 years, understand calculation
Post Office RD vs SIP in Mutual Fund: Investors have two options to invest—market-linked and non-market-linked. In a market-linked option, investment performance is based on the market performance, primarily the performance of assets in that particular option. Then come non-market-linked schemes, where returns are guaranteed. Such investment instruments invest in debt assets, where returns are fixed and investors get returns irrespective of market situation.
Post Office RD vs SIP in best debt mutual fund: Post office recurring deposit (RD) is a fixed interest rate small savings scheme where one can contribute monthly for a lock-in period of five years. On the other hand, medium to long term debt mutual funds have most of their investment in debt instruments and have a lock-in period of 4 to 7 years. Mutual fund investors who don't want to take high risk with their money and invest in comparative safer options invest in debt mutual funds. In this write-up, know which of the options among RD and the top medium to long term debt mutual fund has given higher returns on a Rs 10,000 monthly investment for 5 years.
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How investments are categorised
Investors have two options to invest—market-linked and non-market-linked. In a market-linked option, investment performance is based on the market performance, primarily the performance of assets in that particular option. Then come non-market-linked schemes, where returns are guaranteed. Such investment instruments invest in debt assets, where returns are fixed and investors get returns irrespective of market situation.
What is RD?
In market- and non-market-linked options, some investors make one-time investments, others deposit on a monthly basis. For those who want to make monthly deposits, post office runs the recurring deposit (RD) scheme.
What is RD?
RD has a 6.7 per cent annual interest rate compounded quarterly. The minimum investment in the scheme is Rs 100 a month, while there is no maximum limit. The lock-in period is 5 years, but the account can be extended for a further 5 years.
Which is best medium to long term debt mutual fund?
The top medium to long duration debt fund in terms of annualised SIP returns (XIRR) in the five-year period is UTI Medium to Long Duration Fund - Direct Plan. The fund has given 8.49 per cent annualised SIP returns in five years. The fund has assets under management (AUM) of Rs 301 crore, while its net asset value (NAV) is Rs 73.7754. Benchmarked against CRISIL Medium to Long Duration Debt A-III Index, the fund has given a 6.88 per cent CAGR return since its launch in January 2013.
Which is best medium to long term debt mutual fund?
The minimum lump sum and SIP investment in the fund is Rs 500 each. It has 95.04 per cent of its investments in debt and 4.96 per cent in cash and cash equivalents. The fund's main investments are in GOI Sec 7.18, GOI Sec 7.10, Power Finance Corporation Ltd SR BS227B Debenture 7.77, LIC Housing Finance Ltd Fixed Deposits 7.67, and Jamnagar Utilities and Power Pvt. Ltd SR PPD7 Debenture 7.90.
Post Office RD vs SIP in best debt mutual fund: Which has given higher returns in 5 years?
Rs 10,000 monthly SIP in the UTI Medium to Long Duration Fund - Direct Plan has grown to Rs 7,42,891 in the five-year period.
On a monthly Rs 10,000 investment in post office RD, the interest in five years is estimated to be Rs 1,13,659 and the estimated maturity amount is Rs 7,13,659.