Difference Between FD and RD

Investment without risk: Fixed deposits and recurring deposits are the two most popular investment plans in India, especially for investors who do not want to take the risk at all. The main advantage of investing your money in the Recurring Deposit and Fixed Deposit Scheme is that there is no risk in it, but certain returns are available. But many times investors get confused about which plan they should invest in RD or FD. You can open RD or FD at the post office under post office small investment schemes.

Fixed return: Both RD and FD have pre-fixed income which can be opened in all major banks and post offices. In both schemes, you can invest a certain amount on which you will get interest at a fixed rate. At the end of the plan, investors will get both your invested capital and earned interest.

Major differences between FD and RD

When we talk about RD and FD, the most important difference is that we all should be aware of it. While RD and FD are both done for a fixed term, the investor can deposit at one time while the RD investor has to do fixed deposits at regular intervals.

Customers who opt for fixed deposits will have to choose a term, which usually ranges from 7 days to 10 years, and must be deposited once. Interest on the amount is deposited on a monthly or quarterly basis in the investor's account.

When it comes to recurring deposits, the investor has to deposit a certain amount every month and the interest on which gets the interest. On maturity, the interest is paid to the investor with capital.

Period of time: Typically, the time period for FD schemes can be between 7 days to 10 years. The investor can choose one of these periods with which he is most comfortable. The period for recurring deposits can usually be from 1 year to 10 years. In recurring deposits, the customer has to deposit a fixed amount at regular intervals, which is mostly monthly.

The rate of interest: The interest rate for a fixed year can be between 6.00% to 8.00% for a fixed deposit. The interest rate depends on investment amount and tenure. The interest rate for FD is slightly higher than RD. The interest rate of RD can be between 5.25% to 7.00% for one year term. RD interest rate usually depends on the tenure and monthly investment amount.

What you should choose - RD or FD

For those who do not have the lump sum amount to invest in FD, but can earn a small portion of the investment amount from income every month, recurring deposits (RDs) are right for them. Using SIP Investment, you can know how much amount of regularity you can get and how much maturity value you can get at a reduced interest rate. RD is preferred by many people because a lot of amounts can be deposited per month and almost as much as FD returns.