People keep searching for all kinds of schemes to save their hard-earned money and earn profits on it, but if you want to save Rs 10,000 per month, then you can consider RD and SIP as investment. But the question is, where is it profitable to invest in both these schemes? Where will your money become more in 10 years, 15 years and 20 years? Both the options provide the facility of regular investment, but there is a big difference in terms of returns, risk and long-term fund creation.
RD and SIP are two very popular options in the world of investment, especially for those who want to invest a fixed amount every month, but when it comes to long term i.e. 10, 15 and 20 years, the difference between the two becomes clearly visible. First of all, if we talk about RD, it is a safe investment option, in which you get a fixed interest rate. For example, if you invest Rs 10,000 every month and assume an average interest of 6.05% per annum, then in 10 years your fund will be around Rs 16.48 lakh. In 15 years it can increase to around Rs 29.27 lakh and in 20 years it can reach around Rs 46.54 lakh. The biggest feature of RD is that there is very little risk in it and you know in advance how much money you will get on maturity.
Investing through SIP
On the other hand, if we talk about SIP, it is an investment related to mutual funds, in which the returns depend on the performance of the market. This means that there is more risk in it, but the possibility of returns is also higher. If you do SIP in debt funds, you can get around 6-7% annual returns, which is around the same as RD.
But the real difference comes when you choose hybrid or equity funds. Hybrid funds can give an average return of 8-10%, due to which your investment can reach Rs 57 lakh in 20 years. Whereas in equity funds, there is a possibility of getting returns of 10-13% in the long term. Accordingly, a monthly SIP of Rs 10,000 in 20 years can give you a corpus of Rs 45 lakh to more than Rs 1 crore.
However, one important thing in SIP is that the returns in it are not fixed. Due to market fluctuations, your investment may sometimes go up or sometimes down. But in the long run this fluctuation can translate into better returns on average. Another important difference is flexibility. In SIP you can increase or decrease your investment amount anytime, whereas in traditional RD this facility is limited. Although flexi RDs are also available now, they do not offer as much flexibility as SIP.
Where can investment be made?
The right investment option depends entirely on your risk appetite and financial goals. If you want safe and assured returns, then RD is a better option. But if you want higher returns and wealth creation in the long term, then SIP, especially investing in equity funds, can prove to be more beneficial. In conclusion, it can be said that SIP has the potential to create a bigger corpus in the long run than RD, but it also comes with risks. Therefore, it is very important to understand your needs and risk profile before investing.
Disclaimer: This article is for information only and should not be considered as investment advice in any way. TV9 Bharatvarsha advises its readers and viewers to consult their financial advisors before taking any money related decisions.
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