SIP Returns vs Post Office RD: How Rs 12,500 monthly investment in each of them can turn into in 5 years; get projections
Discover the difference between SIP returns and Post Office RD returns. Learn which investment—SIP or RD—yields better returns for your 5-year investment strategy with Rs 12,500 monthly deposits.
Comparing SIP returns with Post Office RD returns helps investors choose the best long-term investment. A systematic investment plan (SIP) offers higher returns over 5 years compared to a recurring deposit (RD) in the post office. SIP involves regular investments in mutual funds, while Post Office RD provides fixed interest. Understanding SIP vs RD returns is crucial for maximizing investment value. Learn how a Rs 12,500 monthly investment grows differently in SIP and RD over five years.
SIP (Systematic Investment Plan) Returns
SIP is a method of investing in mutual funds where an investor invests a fixed amount regularly, rather than a lump sum.
How SIP Works:
- Investors select a mutual fund scheme and decide on a fixed investment amount.
- The chosen amount is automatically debited from the investor's bank account at regular intervals.
- The amount is used to buy mutual fund units based on the fund’s NAV (Net Asset Value).
- Additional units are added with every new investment, and returns are compounded over time.
Key Features
- Investments grow over time, with compounded returns.
- Investors can choose to receive returns either at the end of the SIP’s tenure or at periodic intervals.
5-Year Projections for Rs 12,500 Monthly Investment
- Total Investment: Rs 7,50,000
- Estimated Returns: Rs 2,81,080
- Total Value: Rs 10,31,080
Post Office Recurring Deposit (RD) Returns
Post Office RD is a recurring deposit scheme offered by the Indian Post Office, allowing individuals to deposit a fixed amount regularly.
Account Opening & Features
- Account Opening & Features
- Accounts can be opened by cash/cheque.
- Nomination facility available during and after account opening.
- Accounts can be transferred between post offices, and multiple accounts can be opened.
- Joint accounts for two adults or minor accounts for individuals aged 10 and above.
- Accounts can be converted between single and joint ownership.
Deposits
- Monthly deposits can be made within specific timeframes based on the account opening date.
- Defaulted deposits incur a fee but must be cleared before making future payments.
- Rebate available on advance deposits of six or more installments.
Withdrawals & Maturity
- One withdrawal of up to 50% of the balance is allowed after one year.
- Full maturity value provided in the event of the depositor's death, subject to certain conditions.
5-Year Projections for Rs 12,500 Monthly Investment
- Total Investment: Rs 7,50,000
- Estimated Returns: Rs 1,37,384
- Total Value: Rs 8,87,384