Fixed Deposits and Recurring Deposits are two of the most famous investment options in India, particularly among risk-averse investors. The major benefit of investing in a fixed deposit program or recurring deposit plan - it is that their returns are ensured and are risk-free. However - a lot of investors are not sure if they need to invest in the RD plan or the FD scheme.
All of the big banks and financial institutions give both RD and FD as fixed income solutions. Both of the schemes would allow you to invest a particular amount and receive a fixed interest rate on that amount. Investors would also get both the capital and the interest at the conclusion of the term.
Here is a table to show the difference between fixed deposits and recurring deposits
|Particulars||Fixed Deposit||Recurring Deposit|
|1) Tenure of the Deposit:||Seven days - 10 years||Six months - 10 years|
|2) Minimum Amount of Deposit for the Schemes:||Rs. 100||Rs. 10|
|3) Deposit Frequency of the Schemes:||Single Deposit||Monthly deposit|
|4) FD vs. RD Interest Rates:||3% to 7%||3.50% to 8.50%|
|5) Payout of the Schemes:||Monthly, quarterly, or yearly withdrawals are possible with FDs. As a result, they provide a reliable source of income.||Returns from RD are only realized when the scheme reaches maturity. At the end of the investment period - the investors are entitled to a lump-sum payment.|
|6) Withdrawals of the Scheme:||This item is not available. Depositors, on the other hand, have the option of discounting their investment and withdrawing the funds. However, there is less attention to such cases.||This item is not available. Depositors, on the other hand, have the option of discounting their investment and withdrawing the funds. However, there is less attention to such cases.|
|7) Auto-Renewal Facility of the Scheme:||The facility is available to FDs.||It is not available to RD schemes.|
|8) Default:||Investors cannot default because the entire payment is made at the start of the term.||The bank or institution has the right to cancel the account if the depositors fail to make RD payments for six months in a row.|
|9) Taxes on the Schemes:||Interest income above INR 40,000 is taxed at 10%, and senior citizen depositors are taxed at INR 50,000. If your PAN isn't submitted, you'll get a 20% discount.||Interest income above INR 40,000 is taxed at 10%, and senior citizen depositors are taxed at INR 50,000. If your PAN isn't submitted, you'll get a 20% discount.|
|10) Tax-Saving Facility:||Deposits with a 5-year lock-in duration are available.||Not available to this scheme.|
|11) Investment Type:||FDs are one-time investment choices that do not encourage depositors to make ongoing investments.||RDs are monthly investment choices that require participants to invest every month for the length of the scheme. As a result, depositors will develop an investment habit.|
|12) Insurance Over the Deposit:||FDs have insurance coverage.||RDs have insurance coverage.|
Mentioned below are the benefits of investing in a fixed deposit scheme:
Mentioned below are the benefits of investing in a recurring deposit scheme:
A recurring deposit (RD) appears to be the appropriate fit for persons who do not have a lump sum to invest in an FD but can afford a modest percentage of the investment amount from their monthly income. Both the RD and the FD are suitable for risk-averse investors who are largely in the lowest tax bracket. Use an online recurring deposit calculator to determine the best option for the amount you have available to invest.
Although no single investment product may fulfill all demands, many people prefer an RD since it is cheaper and also offers nearly the same returns as an FD.