SIP and Recurring Deposit (RD) are both monthly investment instruments, but they work completely differently. Here's the definitive comparison.
Quick Numbers: ₹5,000/month for 10 Years
| Investment | Amount Invested | Maturity Value | Returns |
|---|
| 🏦 RD at 7% | ₹6,00,000 | ₹8,67,000 | ₹2,67,000 (taxable) |
| 📈 SIP at 12% | ₹6,00,000 | ₹11,61,695 | ₹5,61,695 (10% LTCG above ₹1L) |
When RD is Better Than SIP
- Goal within 1-3 years (short-term capital protection)
- Zero risk tolerance — cannot accept even temporary loss
- Planning for specific date expense (wedding in 2 years, etc.)
- Emergency fund building
When SIP is Better Than RD
- Goal is 7+ years away
- Building retirement or long-term wealth
- Can accept short-term NAV fluctuations
- Want to beat inflation meaningfully (RD barely does)
- In 30%+ tax slab (RD interest fully taxable, SIP LTCG more tax-efficient)
💡 Best Strategy: RD for short-term goals + SIP for long-term goals. Use RD for 3-6 months emergency fund. Use SIP for retirement, child education, wealth creation.
Compare returns side by side: SIP vs FD Tool | SIP Calculator | RD Calculator
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⚠️ This article is for educational purposes only. Not investment advice. Contact: teamsipcalculators.in@gmail.com