Both RD and SIP are investment options. In this article, we will explore the key differences between Recurring Deposits (RD) and Systematic Investment Plans (SIP). Learn about RD interest rates, SIP returns after 5 years. Whether you're looking for secure, steady returns with RD or the higher growth potential of mutual funds through SIP, this guide will help you undestand the functioning of Post office RD and SIP returns.
SIP vs RD: How much will a Rs 20,000 monthly investment grow in 5 years
Compare SIP vs RD: What are 5-year returns on Rs 20,000 monthly investment? RD vs SIP returns with a Rs 20,000 monthly investment. Understand Recurring Deposit interest rates, SIP returns, and features and know investment plan for financial growth over 5 years.
ZeeBiz WebTeam | Sep 19, 2024, 05:13 PM IST
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RD (Recurring Deposit)
Account Opening:
- Minimum deposit: Rs 100 per month
- Maximum limit: No limit
- Can be opened by individuals, joint accounts, minors, and unsound persons through a guardian.
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Deposits
- Payments accepted via cash or cheque.
- Must deposit monthly by the 15th or last working day, depending on account opening date.
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Default and Penalties
- Rs 1 default fee for Rs 100 denomination.
- Account discontinued after 4 defaults; can be revived within 2 months.
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Advance Deposit
- Can pay in advance up to 5 years.
- Rebate available for advance deposits of 6 or 12 months.
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Loan Against RD
- Available after 12 installments.
- Loan up to 50% of the account balance.
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Premature Closure
Allowed after 3 years with savings account interest rate applied.
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Maturity
- Standard term: 5 years.
- Can extend for another 5 years.
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RD (Recurring Deposit): Returns on a Rs 20,000 monthly investment?
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Investment: Rs 20,000 per month
- Total Invested Amount: Rs 12,00,000
- Interest Rate: 6.7% per annum (quarterly compounded)
- Estimated Returns: Rs 2,27,315
- Total Value at Maturity: Rs 14,27,315
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Investment: Rs 20,000 per month
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How It Works
- Regular investment in mutual funds with automatic deductions.
- NAVs of the mutual fund are purchased at the time of each investment.
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SIP (Systematic Investment Plan)
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How It Works:
- Regular investment in mutual funds with automatic deductions.
- NAVs of the mutual fund are purchased at the time of each investment.
How It Works:
- Regular investment in mutual funds with automatic deductions.
- NAVs of the mutual fund are purchased at the time of each investment.
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Returns
Reinvestment leads to compounding, resulting in higher returns over time.
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Flexibility
Investors can opt for periodic returns or accumulate the returns until the end of the SIP tenure.
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When to Invest
Can start anytime, with the recommendation of beginning as early as possible to maximise returns.
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SIP (Systematic Investment Plan): Returns on a Rs 20,000 monthly investment?
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Investment: Rs 20,000 per month
- Total Invested Amount: Rs 12,00,000
- Estimated Returns: Rs 4,49,727
- Total Value at Maturity: Rs 16,49,727
Investment: Rs 20,000 per month