SIP vs RD: Which Savings Plan Is the Real Hero for Big Wedding Expenses?

Weddings in India are emotionally grand and financially demanding, often involving expenses on décor, catering, photography, jewellery, outfits, and hospitality—costs that can easily run into several lakhs. Managing such a major event without disturbing long-term financial goals requires timely and disciplined savings. Two of the most commonly considered options for this purpose are SIP (Systematic Investment Plan) and RD (Recurring Deposit). While both promote regular savings, their approach, risk level, and returns are completely different. Here’s a detailed comparison to help you choose the smarter option.

What Is SIP and Why Do Many Investors Prefer It?

A Systematic Investment Plan (SIP) is a method of investing a fixed amount regularly in mutual funds. Since SIPs are linked to the stock market, returns can fluctuate based on market performance. However, the biggest advantage of SIPs lies in their potential to generate significantly higher returns over the long term.

SIPs benefit from rupee-cost averaging and compounding, helping your money grow faster compared to traditional deposit schemes. With a well-selected mutual fund and consistent investment, SIPs may offer returns around 10–14% over a period of 5 years or more. For instance, many investors see an average return of nearly 12% in five-year SIPs, making them an attractive choice for long-term goals like wedding planning, higher education, or wealth building.

What Is RD and When Does It Make Sense?

A Recurring Deposit (RD) is a reliable and secure savings option offered by banks and post offices. In RD, you deposit a fixed sum every month for a predetermined tenure and earn interest at a fixed rate. Unlike SIPs, RD returns are not market-linked, which makes them suitable for individuals who prefer stability over higher gains.

Most banks currently offer RD interest rates around 6–7%, making RDs safer but less rewarding compared to SIPs. Since the returns are fixed, RDs work best for people who do not want to take any market risk and want guaranteed maturity value for short- to medium-term goals.

SIP vs RD: A Practical Comparison for a Wedding Goal

Imagine you want to accumulate ₹15 lakh in the next five years for wedding expenses and you plan to invest ₹18,000 per month.

If You Choose SIP:

• Total invested amount: ₹10.8 lakh

• Estimated returns (approx. 12%): ₹4.04 lakh

• Final maturity value: ₹14.85 lakh

If You Choose RD:

• Total maturity value at around 6.4% interest: ₹12.74 lakh

Conclusion from the Comparison:

A SIP generates approximately ₹2.1 lakh more than an RD in the same period. Over ten years, the gap becomes even wider, strengthening SIP’s position as a wealth-building tool.

Which One Should You Choose?

Both SIP and RD cater to different types of savers:

Choose RD if:

• You want guaranteed returns

• You prefer zero risk

• You are saving for a short-term goal where stability is more important than growth

Choose SIP if:

• You are willing to take calculated market risks

• You want higher long-term returns

• You have a 5–10 year horizon for wealth creation

• You want flexibility to increase your investment amount over time

Final Decision: What’s Best for Wedding Savings?

Planning for wedding expenses requires balancing safety, returns, and time. If you want stable and predictable savings, RD is a safe bet. But if you aim to maximise your wealth and have the capacity to handle short-term market volatility, SIP clearly stands out as the more rewarding option.

Choosing the right investment based on your financial goals, risk appetite, and time duration will not only reduce the financial stress of a wedding but also help you enjoy the celebrations with peace of mind.