RD Vs SIP Calculator: There are different modes of investment these days. While some prefer to invest only in options that ensure guaranteed return, there are others who are willing to take some risk. There are schemes like Recurring Deposits (RD) that offer guaranteed returns. On the other hand, a Systematic Investment Plan (SIP) offers a much better return, but nothing can be promised. While there are several ways to minimise the risk, there remains some uncertainty as the performance of markets is highly unpredictable.
Why SIP is better than RD
It is a well-known fact that SIP can be started even with an amount as low as Rs 500 - just like RDs. But in the case of the SIP, the return is much better.
On average, one can get a return of around 5.8 per cent in case of an investment for five years. Whereas SIP offers an average 12 per cent return and if you happen to be a lucky person, this return can go up to 15-18 per cent or even more. Apart from this, you will get the benefits of compounding.
Return from RD
According to Post Office RD Calculator, if you invest Rs 5,000 per month for five years the total return on your investment will be Rs 48,740 (with monthly compounding frequency). So the total amount that you will get after five years would be Rs 3,48,740.
Return from SIP
In the case of SIP, the average return would be 12 per cent. Considering this, the total return on your investment would 1,12,432. So the amount that you will get after 5 years would 4,12,432. This can be much higher if your SIP gives you a return of 15 per cent or above.
