FD or RD: Which Gives Maximum Returns?

[Maitri_Maniya]

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?

 

[Gautham]

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?

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]

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?

If you have money in your hand, Undoubtedly FD will give you more return than RD.

 

[Maitri_Maniya]

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]

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

 

[EternallyHopeful]

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.

 

[cesc007]

Please go for stable money app, i have been using it and you can benefit 5L guarantee with different small finance banks, with 5-10 min time to deposit.

 

[RAMESH BABU N]

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.

 

[Hell_Kitty]

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.

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:​

1. 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.
2. 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.

For maximum returns, go with an FD if you have a lump sum amount to invest.

 

[RAMESH BABU N]

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.