Should you invest in a fixed deposit or a recurring deposit

2 min read

For those looking to grow their savings with safety and convenience, fixed deposit and recurring deposits are some of the most preferred savings options.

Suppose you are looking for a risk-free investment. One of the significant advantages of investing in an FD or RD is that fixed returns over a specified period with no risk involved. Although both FD and RD give the investor guaranteed returns, a fixed deposit earns you higher than a recurring deposit when you compare the two investment options.

What is a fixed deposit (FD)

A fixed deposit is a financial instrument through which you grow a lump sum over a fixed tenor at a fixed interest rate and with the utmost safety. The returns are assured and not affected by market fluctuations. With a fixed deposit, you earn interest on a lump sum amount at a fixed rate over a pre-determined tenor.

Features and Benefits of Bajaj Finance Fixed Deposit

Interest Rate

Up to 7.75% p.a.

Minimum Tenor

1 Year

Maximum Tenor

5 Years

Deposit Amount

Minimum deposit of Rs. 15,000

Application Process

Easy online paperless process

Online Payment Options

Net Banking and UPI

What is a recurring deposit (RD)

A recurring deposit is an investment instrument that helps you deposit savings at regular intervals until the end of the tenor. The interest is accumulated and credited back to you after completing the tenor, which can range from 6 months to 10 years.

You can reap the benefit of attractive FD interest rates of up to 7.75% p.a. Alongside the highest safety ratings of FAAA by CRISIL and MAAA by ICRA with Bajaj Finance.

Create a corpus to fund your financial goals easily with a Bajaj Finance FD. If you want to grow your savings with FDs while receiving recurring payouts, you can start a Systematic Deposit Plan and make monthly contributions of just Rs. 5,000 or more.

Is RD better than FD?

While Fixed deposits and Recurring Deposit have their advantages, investing in FD is preferred to RD due to the higher returns and flexibility offered by FD.

Here's a look at some reasons that make FD a better investment product than RD:

  • Fixed deposit enables lumpsum investments for a fixed tenor, whereas Recurring Deposit enables periodic investments monthly for a fixed tenor.
  • The tenor for FD ranges from 12 to 60 months, whereas the tenor for RD ranges from 6 to 120 months.
  • Interest is paid out at maturity when investing in RD, whereas, with FD, you can choose to get returns at maturity or periodically.

Difference between FD, RD and SDP (Systematic Deposit Plan)

Fixed Deposit (FD), Recurring Deposit (RD) and Systematic Deposit Plan (SDP) are all convenient savings options that cater to different investment needs. However, it is essential to know which of these options can suit your requirements and goals better, so you can get the best returns on your deposit.

Fixed deposits

A fixed deposit is a savings option that helps you earn interest on savings parked with a financier of your choice. You can choose to get returns periodically or at maturity. The interest rates are typically higher than on money kept in savings accounts because the money is locked in for a specific period and cannot be withdrawn at the will of the depositor, except in specific scenarios in which the customer is ready to bear the penalty for premature withdrawal.

Recurring deposits

A Recurring Deposit (or RD) is an investment instrument that helps you deposit savings at regular intervals until the end of the tenor. The interest is accumulated and credited back to the deposit holder after completion of tenor, which can range from 6 months to 10 years.

Systematic Deposit Plan

Systematic Deposit Plan (SDP) by Bajaj Finance combined the convenience of SIPs (Systematic Investment Plans) and secured returns to help regular savers systematically grow their savings. With flexible tenors and deposits starting just Rs. 5000 per month, you can choose to boost your savings with a Systematic Deposit Plan by selecting any of its two variants:

  • Monthly Maturity Scheme – This variant of SDP enables you to make monthly deposits with returns monthly, wherein the deposit you make every month matures as per the chosen tenor. You can decide to make deposits in the range of 6 to 48 and select flexible tenors ranging from 12 to 60 months.
  • Single Maturity Scheme – With this variant, you can choose to get your maturity proceeds on a single day. However, once you select the tenor while making your first deposit, the tenor for your subsequent deposit(s) is regulated to mature on the same date.

Systematic Deposit Plan offers greater flexibility and ease of investing, enabling regular savers to get secured returns on the monthly savings pool.

The table below highlights the differences between RD and FD.

Particulars

Fixed Deposit (FD)

Recurring Deposit (RD)

Deposit frequency

Deposit a fixed amount every month for a fixed tenor

Monthly

Tenor

12 months to 5 years

6 months to 10 years

Minimum deposit

Rs. 5000 (SDP)

Rs. 15,000 (FD)

Rs. 1,000

Suitable for

Salaried individuals and pensioners, etc.

Housemakers, students and freelancers, etc.

Auto-renewal option

Unavailable Auto-renew your FD with an additional rate benefit of 0.10%

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Frequently asked questions

Should you invest in a fixed deposit or a recurring deposit

For those looking to grow their savings with safety and convenience, fixed deposit and recurring deposits are some of the most preferred savings options.

Suppose you are looking for a risk-free investment. One of the significant advantages of investing in an FD or RD is that fixed returns over a specified period with no risk involved. Although both FD and RD give the investor guaranteed returns, a fixed deposit earns you higher than a recurring deposit when you compare the two investment options.

What is a fixed deposit (FD)

A fixed deposit is a financial instrument through which you grow a lump sum over a fixed tenor at a fixed interest rate and with the utmost safety. The returns are assured and not affected by market fluctuations. With a  fixed deposit, you earn interest on a lump sum amount at a fixed rate over a pre-determined tenor.

Features and Benefits of Bajaj Finance Fixed Deposit

Interest Rate

Up to 7.75% p.a.

Minimum Tenor

1 Year

Maximum Tenor

5 Years

Deposit Amount

Minimum deposit of Rs. 15,000

Application Process

Easy online paperless process

Online Payment Options

Net Banking and UPI

What is a Recurring Deposit?

A recurring deposit is an investment instrument that helps you deposit savings at regular intervals until the end of the tenor. The interest is accumulated and credited back to you after completing the tenor, which can range from 6 months to 10 years.

You can reap the benefit of attractive FD interest rates of up to 7.75% p.a.. Alongside the highest safety ratings of FAAA by CRISIL and MAAA by ICRA with Bajaj Finance.

Create a corpus to fund your financial goals easily with a Bajaj Finance FD. If you want to grow your savings with FDs while receiving recurring payouts, you can start a Systematic Deposit Plan and make monthly contributions of just Rs. 5,000 or more.

Is RD better than FD?

While Fixed deposits and Recurring Deposit have their advantages, investing in FD is preferred to RD due to the higher returns and flexibility offered by FD.

Here's a look at some reasons that make FD a better investment product than RD:

  • Fixed deposit enables lumpsum investments for a fixed tenor, whereas Recurring Deposit enables periodic investments monthly for a fixed tenor.
  • The tenor for FD ranges from 12 to 60 months, whereas the tenor for RD ranges from 6 to 120 months.
  • Interest is paid out at maturity when investing in RD, whereas, with FD, you can choose to get returns at maturity or periodically.
Difference between FD, RD and SDP (Systematic Deposit Plan)

Fixed Deposit (FD), Recurring Deposit (RD) and Systematic Deposit Plan (SDP) are all convenient savings options that cater to different investment needs. However, it is essential to know which of these options can suit your requirements and goals better, so you can get the best returns on your deposit.

Fixed deposits

A fixed deposit is a savings option that helps you earn interest on savings parked with a financier of your choice. You can choose to get returns periodically or at maturity. The interest rates are typically higher than on money kept in savings accounts because the money is locked in for a specific period and cannot be withdrawn at the will of the depositor, except in specific scenarios in which the customer is ready to bear the penalty for premature withdrawal.

Recurring deposits

A Recurring Deposit (or RD) is an investment instrument that helps you deposit savings at regular intervals until the end of the tenor. The interest is accumulated and credited back to the deposit holder after completion of tenor, which can range from 6 months to 10 years.

Systematic Deposit Plan

Systematic Deposit Plan (SDP) by Bajaj Finance combined the convenience of SIPs (Systematic Investment Plans) and secured returns to help regular savers systematically grow their savings. With flexible tenors and deposits starting just Rs. 5000 per month, you can choose to boost your savings with a Systematic Deposit Plan by selecting any of its two variants:

  • Monthly Maturity Scheme – This variant of SDP enables you to make monthly deposits with returns monthly, wherein the deposit you make every month matures as per the chosen tenor. You can decide to make deposits in the range of 6 to 48 and select flexible tenors ranging from 12 to 60 months.
  • Single Maturity Scheme – With this variant, you can choose to get your maturity proceeds on a single day. However, once you select the tenor while making your first deposit, the tenor for your subsequent deposit(s) is regulated to mature on the same date.Systematic Deposit Plan offers greater flexibility and ease of investing, enabling regular savers to get secured returns on the monthly savings pool.

The table below highlights the differences between RD and FD.

Particulars

Fixed Deposit (FD)

Recurring Deposit (RD)

Deposit frequency

Deposit a fixed amount every month for a fixed tenor

Monthly

Tenor

12 months to 5 years

6 months to 10 years

Minimum deposit

Rs. 5000 (SDP)

Rs. 15,000 (FD)

Rs. 1,000

Suitable for

Salaried individuals and pensioners, etc.

Housemakers, students and freelancers, etc.

Auto-renewal option

Unavailable Auto-renew your FD with an additional rate benefit of 0.10%
Can I invest in an FD every month?

Yes, with the Systematic Deposit Plan (SDP), you can choose to make small monthly deposits. Each monthly deposit is treated as a separate FD.

What is the tenor for a fixed deposit account?

The tenor for a fixed deposit is 12 months to 5 years.

What is the tenor for an RD account?

The tenor for an RD account is 6 months to 10 years.

Is RD tax-free?

No, tax is applicable on the income incurred by an RD.

Can I withdraw RD anytime?

Yes, recurring deposit accounts offer the facility of premature withdrawal. Some banks may charge a minimal fee in case of a premature withdrawal.

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