If you want to invest some part of your salary safely, then both Fixed Deposit (FD) and Recurring Deposit (RD) are considered to be the best options. Although both offer guaranteed interest and secure returns, the method of investment is different. Therefore, many people find it difficult to decide which plan will be more beneficial for them.
The right choice depends on whether you have a lump sum amount or prefer to save a small amount every month. Let us know which option – FD or RD – is best for your financial goals.
**Who is RD best for?**
If you want to deposit a fixed amount every month, Recurring Deposit (RD) is the best option. Under this plan, you deposit a fixed amount every month and on maturity get the principal amount as well as the interest accrued. The principal is usually for a tenure of 6 months to 10 years. For example, if you deposit ₹5,000 every month for 3 years at an interest rate of 6.5%, you can get around ₹1.99 lakh on maturity.
**When should one choose FD?**
If you have a large amount, then fixed deposit (FD) proves to be a great option. In this you deposit money once and get a fixed interest rate for a fixed period. The tenure of FD can range from 7 days to 10 years, and many banks offer higher interest rates to senior citizens. For example, if you invest ₹2 lakh in an FD for 3 years at 7% interest rate, you can get around ₹2.46 lakh on maturity.
**Which plan should you choose?**
If you get a salary every month and want to gradually build a big fund, then RD is a better option for you. On the contrary, if you have a lump sum amount and want to get guaranteed returns on it, then FD will be more beneficial.
