If you are going to invest for the first time, then you can choose the option of investing in Recurring Deposit (RD) of Post Office or Mutual Fund. Here’s an overview of post office and mutual fund SIP investments, which one might be better for you. You can get more profit by choosing one of these options. Let us know the complete details.
SIP and Recurring Investment ensures present and future financial security. This enables investors to grow their wealth while also generating inflation-beating returns. Compounding is also beneficial for you.
Post Office Recurring Deposit (RD)
Money is deposited every month in the Post Office Recurring Deposit Scheme. In this, you can invest from small to large amounts. Recurring deposit scheme is opened for 5 years, which can be extended for a few years. In this, compound interest is given every quarter. Also, it is safest to invest in it, as it does not involve market risk.
It gives a guaranteed return of 5.8%. It is a short term investment option in which a minimum investment of Rs 100 is invested in multiples of 10. There is no maximum limit. This is a tax free scheme.
mutual fund sip
Mutual funds are one of the most popular investment options. Mutual funds also provide tax benefits to the investors. Mutual Fund SIP is a better option to invest a small amount in a mutual fund scheme on a regular basis. Every month a small amount is deducted from your account when you start SIP investment. After that you can invest in mutual funds of your choice. Investing through SIP is less risky.
tax benefits and risks
It does not give guaranteed returns, as it is subject to market risk. It provides liquidity by enabling investors to make withdrawals without any exit charges. On the other hand, if the SIP of an equity fund is held for less than 12 months, then short term capital gains will be taxed at 15%. But if the SIP of an equity fund is held for 12 or more months, tax on long-term capital gains at 10% above Rs 1,00,000 will be applicable.
How much can you start investing
In this, you can start investing from Rs 500, while you can invest any maximum amount. SIP can help with all kinds of investment goals, be it short or long term, depending on the frequency of investment, the fund chosen and other factors.
Explain that investing in recurring deposits and SIPs is better for those who invest a fixed amount every month. Also, if they want to get more profit then they can invest in them, but they should invest only after looking at the risk.