SIP vs RD: What will be your return in 5 years on monthly investment of Rs 6,000?
Compare SIP and RD to see how a monthly investment of Rs 6,000 grows in 5 years.
SIP vs RD: Systematic Investment Plan (SIP) and Recurring Deposit (RD) are two popular investment options for disciplined savings. SIP involves periodic investments in mutual funds, offering potentially higher returns with market-linked growth. On the other hand, RD is a safe, fixed-income scheme where regular deposits earn guaranteed interest, ideal for conservative investors.
What is SIP?
A Systematic Investment Plan (SIP) is a mutual fund investment method where a fixed amount is invested periodically, enabling disciplined savings and long-term wealth creation.
How Does SIP Work?
SIP investments auto-debit from your bank, allocating units of mutual funds based on NAV. Over time, reinvestments and compounding enhance returns.
Returns on SIP
Monthly Investment: Rs 6,000
Invested Amount: Rs 3,60,000
Estimated Returns: Rs 1,34,918
Total Value: Rs 4,94,918
What is RD?
Recurring Deposits (RD) are savings schemes where you deposit a fixed amount monthly in a post office or bank, earning interest over time.
How Does RD Work?
RDs involve regular deposits, and the interest is compounded quarterly. Withdrawals are made upon maturity, or loans can be availed against deposits.
Returns on RD
Monthly Investment: Rs 6,000
Invested Amount: Rs 3,60,000
Estimated Returns: Rs 68,197
Total Value: Rs 4,28,197
SIP vs RD: Key Differences
SIP: Higher potential returns due to market-linked investments.
RD: Fixed returns with guaranteed safety.
Flexibility in SIP and RD
SIP: Easy to modify or pause investments.
RD: Limited flexibility, default penalties for missed payments.
Which is Better for You?
SIP: Suitable for those with a higher risk appetite and long-term goals.
RD: Ideal for conservative investors looking for stable returns.
Final Comparison
SIP Total Value: Rs 4,94,918
RD Total Value: Rs 4,28,197