FD vs RD: Which Offers Higher Returns on a 5-Year Investment of ₹5 Lakhs? Understand Everything Through Calculations...

FD vs RD: In today's times, amidst significant volatility in the stock market, the importance of secure investment schemes has increased even further. Both Fixed Deposits (FD) and Recurring Deposits (RD) are already popular investment schemes. Both of these schemes are completely secure, meaning they offer guaranteed returns.

Both FDs and RDs are secure schemes; however, there is a key difference between them. In an FD, you invest a lump sum amount, whereas in an RD, you can invest in installments—much like a Systematic Investment Plan (SIP). The question now arises: which is more beneficial—an FD or an RD—and which is likely to yield higher returns for you? Let's understand this with the help of some calculations.

**RD Calculation**
For our calculations, we have assumed an RD interest rate of 6.50%. This is based on information from *BankBazaar*, which indicates that most banks are currently offering an interest rate of 6.50% on Recurring Deposits. We utilized the SBI Securities calculator to perform these calculations.

Investment Amount: ₹5 Lakhs over 5 years (₹8,333 per month)
Investment Return Rate: 6.50%
Investment Tenure: 5 Years
If an individual invests ₹5 Lakhs over a period of 5 years, they will receive a total of ₹5,92,116 at the end of the 5-year term. Over these five years, the investor will earn a return of ₹92,136.

**FD Calculation**
According to data obtained from *Paisabazaar*, the average return currently offered on Fixed Deposits is 6.82%. Let us perform the calculations based on this interest rate.

Investment Amount: ₹5 Lakhs
Investment Return Rate: 6.80%
Investment Tenure: 5 Years
If an individual invests a lump sum of ₹5 Lakhs for a period of 5 years, they will earn a return of ₹2,00,469 based on an interest rate of 6.80%. Consequently, you will receive a total of ₹7,00,469 upon maturity. This amount is compounded on a quarterly basis.

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