Fixed Deposit or Recurring Deposit: Indians love risk-free investments. We love to save and invest our savings to maximise them.
For many risk-averse investors in our country, Fixed Deposits (FDs) and Recurring Deposits (RDs) are the ideal investment options.
We will explain everything you need to know about both these investment options, including their meaning, the difference between RD and FD, and which is best for you.
If you want to invest in FDs or RDs, it depends on your financial goals, risk tolerance, and liquidity needs.
What is a recurring deposit account?
The automatic deposit account helps people save money in a smart way and is good for people who get regular paychecks.
Features of a recurring deposit account
- Specified intervals of regular fixed deposits
- Options for flexible tenure
- Deposits that are smaller each month
What is a fixed deposit account?
Fixed deposit accounts earn higher interest than recurring deposit accounts because they involve a one-time lump sum deposit for a specified period.
Features of a fixed deposit account
- A lump sum deposit for a specified period of time
- Rates of interest are higher
- Selection of tenure with flexibility
Fixed Deposit (FD):
- An initial lump sum deposit is required for FDs.
- The interest rate is fixed at the time of investment and remains constant throughout the term of the investment.
- Some FDs work for a few months, while others work for a few years.
- Interest can either be compounded and reinvested or paid out regularly depending on your preferences.
- You may lose interest and be penalized if you break FDs before maturity.
Recurring Deposit (RD):
- You can save a certain amount of money every month if you have an RD.
- You do not have to pay every month.
- Like FDs, RDs have an interest rate that stays the same for the whole loan time.
- RDs know how much they owe and have a set amount of time to pay it.
- You can borrow against or take out the money in your RD account if you need to.
Also Read: SSI Payment Schedule for May 2024: Find Out When Your Direct Deposit Arrives
