SIP vs. RD Calculator | Which one is better? - FinCalC blog (2023)

In this post, we look at the comparison between SIP and RD calculator that will help you to decide to choose between SIP and RD and which is the better option to reach your financial goals.

use thisSIP calculatorto know your returns on monthly SIP (Systematic Investment Plan) easily. A good expected return on mutual funds via SIP is 12% in one year. use thisRD calculatorto know how much interest you can get in RD (recurring deposits). RD interest rates can range from 5% to 7% in a year.

Table of contents

  • Comparison of SIP and RD returns
  • SIP vs RD Calculator Video
  • What is the difference between SIP and RD account?
    • When can SIP be started?
    • When can RD be started?
  • Interest rates in SIP and RD
  • Pros and cons of SIP
    • Benefits of SIP
    • Disadvantages of SIP
  • Pros and cons of RD
    • Advantages of RD
    • Disadvantages of RD
  • SIP vs RD Which is Better?
    • Rs. 2000 SIP Returns Calculation Video
  • Diploma

Below is the comparison of returns on SIP and RD on Rs. 2000 deposits per month with 12% return in SIP and 6% return in RD:

Comparison of SIP and RD returns

SIP vs. RD Calculator | Which one is better? - FinCalC blog (1)

As seen above, we getRs. 1619 gains in SIPover 1 year deposits from Rs. 2000 andRs. 791 gains in RDfor the same period and amount. The only difference is the ROI, which is considered 12% for SIP and 6% for RD.

Note that RD returns are guaranteed once you open an RD account with a bank or post office, while the SIP return rate is not guaranteed and depends on market conditions. We can only assume the SIP return rate for calculation purposes, but it may not always be correct.

SIP vs RD Calculator Video

SIP vs. RD Calculator | Which one is better? - FinCalC blog (2)

(Video) ₹1000 SIP vs RD Returns Calculation | Which is Better between SIP & RD?

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In the video above, we covered more examples of SIP vs RD calculator comparisons to give a better idea of ​​returns. It is not necessary that you always get less and less returns on RD.

If market conditions are not good, you can also get less returns in SIP in the short term.

What is the difference between SIP and RD account?

Now let's understand the differences between SIP and RD account:

SIP (Systematic Investment Plan)RD (recurring deposit)
SIP full form isSystematic investment planRD is full formRecurring deposit
SIP is aOpportunity to invest in mutual fundsor shares each month with a predefined amountRD will help you with thatSave for your future goal by savingin bank or post every month with a predefined amount
SIP can be started online or offlineRD can also be started online or offline
SIP can beStarted with AMC(wealth management company) or through brokersRD can bebooked at the bank or post office
SIP investments areriskyshort termRD isnot riskyat all
GulpReturns are not guaranteed. You can only see past returns of SIP and some other factors to invest in a good mutual fundRDReturns are guaranteed, since the interest rate is set and fixed when the RD account is opened
We use SIP forlong-term goals– like 5-7 years at leastRD can be used forshort-term goalsbetween 6 months and 3 years
Short-term SIP returns may be lower compared to RDRD interest is guaranteed
For more information, seeHow to start SIP online hereReceiveRD-Rechner in Excelhere for offline calculations and interest rate details

So, above are some differences between SIP and RD.

Note that we launch SIP for long-term goals and the time horizon when launching SIP must be at least 5-7 years. Use RD for your short-term goals from 6 months to 1 year.

When can SIP be started?

Below are some examples of destinations when SIP can be started:

  • Are you planning a child marriage or an education that you have more than 10 years to complete – start with Rs. 2000 SIP
  • Planning to buy a new house after 7 years – start with Rs. 5000 SIP
  • Car purchase after 5 years – from Rs. 3000 SIP

The above goals are those with a long-term horizon and sip can help us achieve better returns in the long-term.

ALSO READ:Best Mutual Funds to Invest via SIP

(Video) PPF vs Mutual Funds Which is Better? SIP Returns With Calculators [Hindi]

When can RD be started?

Now let's look at some examples of targets when RD is ready to start:

  • Buying a new smartphone after 6 months – start from Rs. 2000RD
  • Save to buy gold after 1 year – start with Rs. 5000RD

So above are some short-term goals you can achieve via RD.

Interest rates in SIP and RD

SIP returns can range from 10% to 15% over the long termso we assumed a 12% yield for calculation purposes. Because SIP returns are dependent on market conditions, we cannot predict exact SIP returns.

In the short term like 6 months or 1 year your deposited principal is also at risk as we have seen during the Covid phase (between March 2020 and June 2020) but in the long term we have seen in the past that we have better returns of around 10% up even 18% are some of the best mutual funds if we look at a 7 to 10 year time horizon.

on the other handRD interest rates can range from 5% to 7%based on the bank or post office you are investing in. The RD interest rate is fixed during the opening of the RD account and therefore we receive guaranteed interest regardless of the market conditions.

ALSO READ:Rs. 1000 SIP returns for 15 years

Pros and cons of SIP

Now let's look at the pros and cons of SIP:

Benefits of SIP

  • Helps us achieve long-term goals of at least 5 to 7 years
  • Can start SIP online without any problems
  • Flexibility to launch SIP directly with AMC or indirectly with Broker

Disadvantages of SIP

  • No good returns short term like 3 months to 6 months
  • Risky with short-term goals
  • Fees levied on our investments via SIP in mutual funds, in the form ofexpense ratio

Pros and cons of RD

Now let's look at the pros and cons of RD:

Advantages of RD

  • Good option for short-term goals
  • Guaranteed returns on RD account
  • Risk-free option for short-term savings
  • Can be opened online via internet banking

Disadvantages of RD

  • Less return in the long term compared to SIP
  • Cannot accumulate sufficient amount for long-term goals
  • Poststelle RD can only be booked offline for the time being

ALSO READ:SIP vs. increase in SIP return calculation

(Video) PPF & FD Interest Calculators | Which One is Better? | PPF & Fixed Deposits Interest Rates

SIP vs RD Which is Better?

Now the important question is what is better between SIP and RD options. Where to start investing or saving.

Short answer – For your long-term goals of at least 5 years, use SIP investments to accumulate a sufficient amount for your goal. The SIP amount in this case depends on your expected due amount. And for your short-term goals from 6 months to 2 years, open RD (Recurring Deposit) to save towards your goal.

SoSIP is better for your long-term goalsAndRD is better for short-term goals.

Rs. 2000 SIP Returns Calculation Video

SIP vs. RD Calculator | Which one is better? - FinCalC blog (3)

Watch more videos on the YouTube channel


We looked at the SIP vs. RD calculator and compared the results of both calculators. SIP in mutual funds is risky in the short term, so we need to use RD for short-term goals.

We must use SIP investments for long-term goals of at least 5 years. Both SIP and RD can be opened online to achieve your financial goals.

Comment below which is your preferred investment option and how much you have invested in those options to reach your financial goals.

Some more reading:

(Video) SIP Returns in Sensex for 25 Years | SIP Returns Calculation Examples in Hindi

  • Income Tax on SIP
  • How to save on income tax on income over 7 lakh
  • Postal systems with high returns
  • Rs. 10,000 FD interest calculation

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(Video) SIP vs PPF Which is Better? SIP & PPF Calculator & Benefits in Hindi | Mutual Funds vs PPF

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