Maitri_Maniya
TF Select
I'm trying to decide between Fixed Deposits (FDs) and Recurring Deposits (RDs) for the best returns. I can invest either a lump sum or monthly. Which option offers the highest returns?
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FD or RD: Which Gives Maximum Returns?
- Thread starter Maitri_Maniya
- Start date
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- Tags
- fixed deposit recurring
if it's lumpsum, then FD. if you invested all your lumpsum into FD and want to prepare next lumpsum means put it into RD.
NCD
TF Buzz
If you have money in your hand, Undoubtedly FD will give you more return than RD.
Maitri_Maniya
TF Select
also I recently came across the Blance App, which offers a recurring deposit scheme with a promised return of 10%. Is it legitimate and reliable? any review about this?
wiseinvestor
TF Buzz
Go with FD.
Also start you can start RD to collect fund for your next FD. Once you have sufficient amount, let's say 1L then make FD of that 1L
Also start you can start RD to collect fund for your next FD. Once you have sufficient amount, let's say 1L then make FD of that 1L
EternallyHopeful
TF Premier
At fixed rate of return, a lump sum always gives more returns than monthly installments. That means, for the same duration and same rate of return, a lumpsum FD will always fetch more than an RD. So if you have lumpsum amount, for fetching more returns, the obvious choice would be an FD.
RAMESH BABU N
TF Legend
Both effectively give arounf the same rate of interest.
In RD compounding effect gets you more than what you get in FD.
Decide based on your income streams.
In RD compounding effect gets you more than what you get in FD.
Decide based on your income streams.
Wrong. How can RD give better than FD is interest rates and duration are same.
If the interest rate and the investment period are the same, a Fixed Deposit (FD) typically yields better returns than a Recurring Deposit (RD) due to the way interest is calculated. Here's why:
Key Difference in Interest Calculations:
- Fixed Deposit (FD):
- The entire amount (₹10 lakh in this case) is deposited upfront.
- Interest is calculated on the full amount from the start of the period.
- Recurring Deposit (RD):
- You deposit money in monthly installments over the period.
- Since the money is added gradually, the interest is calculated on the accumulated amount (not the full amount) at any given time.
Example for Comparison:
Assume:- Interest rate: 6% p.a. (compounded quarterly)
- Tenure: 1 year
Fixed Deposit (FD):
- Principal = ₹10,00,000
- Total amount at maturity = ₹10,61,362
- Interest earned = ₹61,362
Recurring Deposit (RD):
- Monthly deposit = ₹10,00,000 ÷ 12 = ₹83,333.33
- Total amount at maturity = ₹10,53,874
- Interest earned = ₹53,874
Conclusion:
- FD gives better returns because the entire sum is invested from the start, allowing the power of compounding to work fully on the whole principal amount.
- In contrast, an RD earns interest only on the accumulated balance, which grows gradually over time.
RAMESH BABU N
TF Legend
Focus on COMPOUNDING EFFECT.
In FD - principal remains the same.
In RD - principal keeps on balooning.
FD is good if you have a lot to invest.
RD is good for investing monthly.
As I said earlier, decide based on your income streams.
In FD - principal remains the same.
In RD - principal keeps on balooning.
FD is good if you have a lot to invest.
RD is good for investing monthly.
As I said earlier, decide based on your income streams.
fradela
TF Ace
Both are not giving best returns. Even less return than inflation.
FD has TDS.
If you are in 30% tax slab. You will get nothing after tax deductions.
Upto 5L only covered in insurance. If you 50L in FD, the bank goes bankrupt, you will get only 5L. You will lose 45L.
Both FD and RD have locking period. If you would need money you will have to penalty.
For long term, invest on Equity Mutual Funds.
For Short term, invest on Debt Mutual Funds.
FD has TDS.
If you are in 30% tax slab. You will get nothing after tax deductions.
Upto 5L only covered in insurance. If you 50L in FD, the bank goes bankrupt, you will get only 5L. You will lose 45L.
Both FD and RD have locking period. If you would need money you will have to penalty.
For long term, invest on Equity Mutual Funds.
For Short term, invest on Debt Mutual Funds.
fradela
TF Ace
Read my article about Equity Mutual Funds.
fradela
TF Ace
Read this article from some Finance magazine about Liquid Funds (One of the Debt Mutual Funds)
Invest Liquid Mutual Fund in order to get more return and safety compare to Banks Savings account and FD.
fradela
TF Ace
Read this article about SWP - Best tool for retired people.
Withdraw you money from Mutual Funds use Systematic Withdrawal Plan (SWP_. It is opposite to SIP.
RAMESH BABU N
TF Legend
The OP wanted to know which is better - between the FD and RD.
There are more than a handful of other options also available for those who are willing to take some (a lot of) risk.
Even in MF, there is a chance of losing some of the realisable value of the corpus invested. Experienced investors can vouch for this.
Govt of India, had officially notified that 3 big banks as fundamentally so strong that there is hardly any chance of failure.
So, that notional safety ceiling level of 5L does not apply for these 3 banks. SBI (22,500+ branches), HDFC (8,800+ branches)
and ICICI (6,600+ branches) are so widely spread, it is so much easier for anyone - anywhere in India - to open either a FD or
a RD in any one of them - either offline or online.
These banks are too big to fail. They are part of economy. If they fail Indian economy collapses.
fradela
TF Ace
only Equity MF has high risk and high reward.
Patience is key for growth.
fradela
TF Ace
In Debt Mutual Funds, Over night funds, Liquid Funds are less risk than FD and RD.
More safety.
fradela
TF Ace
Invest on GILT debt mutual funds.
Gilt Funds are debt funds that only invest in bonds and fixed interest-bearing securities issued by the state and central governments.
100 sovereign guarantee.
High returns in the long term.