RD vs FD— Big news for investors. If you have Rs 7 lakh and you want to invest it somewhere safe for the next 5 years, then this question must have come to your mind, FD or RD? Both options are reliable, but their method is different. Some people want to deposit a large amount at once, while some people like to save a little every month. In such a situation, it is important to know which option will give you more benefit and is closer to your needs.
What is FD ?
In FD , you have to deposit the entire amount at once. For example, if you have Rs 7 lakh, you can deposit it at once. This amount will be locked for 5 years and will get regular interest on it. After 5 years , you will get interest along with the principal.
What is RD ?
In RD , you deposit a small amount every month. That means you don’t have to invest the entire Rs 7 lakh at once. You can deposit a fixed amount every month for 5 years . You get interest on this too, but a little less than FD .
Interest rates and benefits
General customers get interest ranging from 3.05% to 6.60% on SBI FD .
Senior citizens can get up to 7.10%.
Post Office RD offers around 6.7% annual interest, which is compounded every quarter.
If you invest Rs 7 lakh in FD , then after 5 years you will get approximately Rs 9.66 lakh . That is, the profit will be Rs 2.66 lakh.
At the same time, if you deposit the same amount every month in the form of RD , then after 5 years you will get Rs 8.34 lakh. That is, the profit will be Rs 1.32 lakh.
What to choose?
If you have money at once and want higher returns, then FD is right. If you want to save every month, then RD is better for you. Interest on both options is taxable. Consult a financial advisor before investing.