RD was the first bet previously due to assured rate of interest and automatic withdrawal from savings bank account to RD account.

On the other hand with same withdrawal structure SIP in Mutual Fund can give you promising wealth creating investment avenues for a bright financial future, where you can accomplish many of your financial goals,

Recurring deposit and SIPs both inculcate discipline and regular investing habit. But for your long-term financial wellbeing, where you need tax efficient and effective inflation-adjusted returns, SIPs are certainly worth the risk of investing in mutual funds.

Our shortlisted products can significantly give better returns than RD on long run and are more flexible. The money can be withdrawn anytime and you can earn interest daily in place of once a quarter/half yearly/yearly in case of RD.

Significance difference between MF and Recurring Deposit

Typical Returns 5–7 % 7-13%
Typical Net Return (Post Taxes & Penalties) 4-5%(End Of Term) 2.5-4% If RD is 'Broken' 7-12%
Convenience Of Invest Monthly Automatic Bi-Weekly/ Monthly Automatic
Penalty/Exit Load 1-2% 0%
Tax (Most Important)* As Per Tax Slab Debt Less Than 5% Arbitrage-0%
Withdrawal Fixed Premature Penalty Term/Anytime
Compounding Quarterly/Yearly Daily
Partial Withdrawal Sometimes Always Allowed
Locking Period Fixed Term/Premature With Penalty NIL
Risk Factor LOW LOW
Flexibility Have to visit bank to create RD Investment can be done online or offline
Transparency No Transparency Can Have complete portfolio information

Do some number crunching here!

*RDs can attract a tax rate as high as 30% depending on your personal tax rate. Debt Mutual Funds have lesser than 5% tax if held for more than three years and same tax as FDs if held for less than 3 years Arbitrage funds have zero tax