What is FD and RD? Which is better FD or RD?
When it comes to safe and reliable investment options in India, two names stand out,Fixed Deposit and Recurring Deposit. These have been popular choices for conservative investors or people who want steady returns over market risks. But now the question is what is FD and RD?
To put it simply, a Fixed Deposit or FD is a one time deposit made with a bank or financial institution. You both agree to a fixed tenure and interest rate while making this deposit. You have the option to start as low as Rs. 1000 and lock it in for 7 days till up to 10 years. The bank pays an interest on this investment at maturity in return, i.e., principal + accumulated interest.
If you have a surplus fund and you want to earn returns on it without risking market volatility, then FD is a good option.
Now coming to Recurring Deposit or RD. It is generally referred to as a disciplined savings plan. You invest a fixed amount every month for a chosen tenure unlike the lump sum amount of FD. The bank pays you interest on these contributions and you receive the total amount at maturity. RDs are perfect for salaried individuals or anyone looking to build a savings habit gradually.
Both FD and RD are low-risk investments that help you grow your money steadily. Whether you’re saving for a short-term goal or building a financial cushion.