SIP vs RD: Where will you get massive returns over 10 years by investing ₹10,000 monthly? Here is the complete calculation..

Are you thinking about building a substantial fund for your future but aren't sure how to invest? If so, this information is for you. Given today's inflation, it is crucial to start financial planning for yourself and your children right away. Today, we will discuss two investment options and calculate which one—SIP or RD—yields a larger corpus.

SIP vs. RD:

Both are excellent investment methods. Through an SIP (Systematic Investment Plan), you invest in mutual funds, which carry market risk. An RD (Recurring Deposit), however, works differently; you invest small amounts monthly with a bank or post office, but the returns do not match those of an SIP.

Understanding through calculation
SIP Calculation

Monthly investment: ₹10,000
Investment tenure: 10 years
Average return: 12%
Total investment: ₹12,00,000
Total corpus generated: ₹22,40,359

RD Calculation

Monthly investment: ₹10,000
Investment tenure: 10 years
Average return: 6.5%
Total investment: ₹12,00,000
Total corpus generated: ₹16,89,871

The calculations clearly show that while the monthly investment amount was the same (₹10,000), the SIP yielded a gain of approximately ₹5 lakh more than the RD. Note that SIP returns can vary depending on the specific fund, just as RD interest rates vary across different banks.

Which one is right for you? If you are willing to take on some market risk and aim to build a substantial corpus, an SIP is a good option for you. You can choose to continue your SIP beyond the 10-year mark, allowing you to reap the ongoing benefits of compounding. In fact, by maintaining an SIP of ₹10,000 for approximately 21–22 years, you could accumulate a fund exceeding ₹1 crore.

However, if you wish to avoid market risk while still investing, a Recurring Deposit (RD) is a suitable alternative. Investing in an RD helps you maintain the habit of saving, and your fund will steadily grow over the years.

Regardless of where you choose to invest, always align your investments with your specific needs. Assess your risk appetite before deciding on an investment avenue, and ensure that you invest only those funds which you will not require in the near future.

Disclaimer: This content has been sourced and edited from Dainik Jagran. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.