Should you invest in Fixed Deposit or Recurring Deposit? Check the difference

financialexpress.com:

Investment options offering fixed returns are quite popular among investors who wish to growth their money without taking risks associated with market fluctuations. Fixed Deposits (FDs) and Recurring Deposits (RDs) are the two such products. These are popular investment options offered by banks and financial institutions, with their own set of features and benefits. However, before making any investment, understanding the difference between the two can help in taking an informed decision based on one’s financial goals and preferences.

FDs are secure investment options. When you invest in an FD, you deposit a lump sum amount with a bank or financial institution for a predetermined period at a fixed interest rate. This interest rate remains constant throughout the tenure of the deposit, offering stability and predictability in returns. FDs usually have varying tenure options, ranging from a few days to several years. The interest earned on FDs is higher compared to savings accounts, making it an attractive option for individuals looking for stable returns.

On the other hand, Recurring Deposits (RDs) are a systematic way of saving money on a regular basis. In an RD, investors deposit a fixed amount at regular intervals, typically monthly, with the bank or financial institution. These deposits accumulate over time and earn interest similar to FDs. RDs also come with predefined tenure, and the interest rates offered are usually similar to those of FDs.

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Adhil Shetty, CEO, Bankbazaar.com, says, “One of the primary differences between FDs and RDs lies in the mode of investment. FDs require a lump sum amount to be deposited initially, while RDs allow investors to