Personal Finance Tips: If you want to invest some part of your salary in a safe place, then both Fixed Deposit (FD) and Recurring Deposit (RD) are considered the best options. Both give fixed interest and secure returns, but the method of investment is different. Therefore, most people find it difficult to decide which scheme will be more beneficial for them.
The right choice depends on whether you have a lump sum amount or want to save a small amount every month. Let us find out which FD or RD is the best option for your financial goals.
Who is RD better for?
If you want to deposit a fixed amount regularly every month, then Recurring Deposit (RD) would be the best option. Under this scheme, you deposit a fixed amount every month and get interest along with the principal amount on maturity. Its duration usually ranges from 6 months to 10 years. This means that if you deposit Rs 5,000 every month for 3 years at an interest rate of 6.5%, you can get approximately Rs 1.99 lakh on maturity.
When should you choose FD?
If you have a large amount of money at once, then fixed deposit (FD) can be a very good option. Once you deposit money, you get fixed interest for a fixed period of time. The tenure of FD ranges from 7 days to 10 years, and many banks also offer extra interest to senior citizens. So, if you invest Rs 2 lakh in FD at 7% interest for 3 years, you can get around Rs 2.46 lakh on maturity.
Which scheme should you choose?
If you get a monthly salary and want to gradually build a big fund, then RD can be a better option. However, if you have a lump sum amount and want fixed returns, then FD will be more beneficial.
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