Investment :Everyone works hard to earn money, but it is equally important to invest it in the right place. No matter how much you earn, it is wise to plan your savings and investments for the future. In difficult times, your savings become your biggest support.

But the question is where and how to invest? There are many options in the market, but Recurring Deposit (RD) and Systematic Investment Plan (SIP) are the two methods that are most popular. Come, let us know which investment is better for you and why.

RD and SIP: What is special between both?

Recurring Deposit (RD)

RD is such an investment option in which you deposit a fixed amount every month in the bank or post office. Its biggest feature is that the interest rate is fixed in advance, which means there is absolutely no risk. On completion of the stipulated time, you get your deposit amount along with the interest earned on it. This is great for those who want safe and guaranteed returns.

Systematic Investment Plan (SIP)

At the same time, SIP is an easy and flexible way of investing in Mutual Funds. In this you put a fixed amount every month, which is invested in the stock market. Yes, there is some risk involved, but in the long run the returns can be much higher than RD. In SIP, you can earn an average annual return of 10-15% by taking advantage of market fluctuations. But keep in mind, there is a risk of loss in the short term. The special thing about SIP is that there is no strict lock-in period in it, and you can stop or change it anytime.

What is the difference between RD and SIP?

Difference between security and returns

Investment in Recurring Deposit (RD) is done through bank or post office. In this you get a guaranteed return of 6% to 7.5%, and the risk is almost negligible. But it has a lock-in period, which can range from 6 months to 10 years. If you withdraw money before time, you may have to pay penalty. Besides, tax also has to be paid on the interest on RD. It is best for those who want stable and safe investment.

Risk and Flexibility

At the same time, SIP works through Mutual Funds, where the returns depend on the stock market. In the long run it can give returns of 10-15%, but the risk is moderate to high. There is no lock-in period in SIP, which means you can withdraw your amount whenever you want. Long Term Capital Gains (LTCG) tax is applicable on equity SIPs after 1 year. It is good for those who expect high returns and are willing to take some risk.

Which one to choose?

Both RD and SIP are great ways to invest, but which one is better for you depends on your needs and risk appetite. If you want your money to be completely safe and you get guaranteed returns, then Recurring Deposit (RD) is right for you. But if you want to invest for a long time and can take some risk for higher returns, then SIP may be better for you. Both the schemes have their own advantages and disadvantages, so take the decision wisely.