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Please clarify me the difference between FC and RD

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Renju M.R asked over 2 years ago

Friends, Give the detail description about the difference between FD (Fixed Deposit) And RD (Recurring Deposit)?

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2 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Ashika answered over 2 years ago

here is the difference between FC and RD Duration: Fixed deposit accounts can be opened for a minimum of 7 days, to a maximum of 10 years. Recurring Deposit accounts can be opened for a minimum of 6 months, and a maximum. Which earns greater interest? A fixed deposit will earn more income on the same amount than a recurring account. You may ask why, especially since the rate of interest on both is the same? This difference lies in the theory of compounding – earning interest on interest. The more you save and the quicker you save, the more interest you earn on the interests. It is simple. Advantages of a recurring deposit account: Like fixed deposit accounts, recurring deposits are safe investments that guarantee good returns. A recurring deposit comes handy if you suddenly need money for meeting some emergency like paying up hospital bills in case of some major illness. Moreover, you don’t put away all your money into a deposit account all at once. You do so in installments. This helps your liquidity needs. With the money collected at the end of the tenure, you can meet both short-term goals like money for the down payment for buying a new car, a fridge, new furniture and long-term goals like saving up for higher education of children, buying a house or meeting wedding expenses of children. So which one should invest in? A fixed deposit or a recurring deposit? It all depends on your needs. A fixed deposit account earns interest in a compounding manner on the initial lump sum deposited. The entire amount earns money for 1 year, but in the case of recurring deposits, the first installment earns interest for 12 months, the second for 11 months, the third for 10 months, and so on until the end of the deposit term. In real time, you make more money with a fixed deposit (As illustrated by the below example), but it does not have the flexibility of a recurring deposit account in terms of being able to deposit smaller amounts as and when they become available to you. Example for Fixed Deposit Account:- 1.Amount invested = Rs.24,000 (lumpsum) 2.Interest rate per annum = 9% (compounded quarterly) 3.Total annual interest earned = Rs.2,234 4.Total account balance after one year = Rs.26,234 Example for Recurring Deposit Account:- 1.Amount invested = Rs.2,000 (per month for 12 months) 2.Interest rate per annum = 9% (compounded quarterly) 3.Total annual interest earned = Rs.1,195 4.Total account balance after one year = Rs.25,195

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 megha answered over 2 years ago

hello sir, here is the difference between FC and RD **Duration**: Fixed deposit accounts can be opened for a minimum of 7 days, to a maximum of 10 years. Recurring Deposit accounts can be opened for a minimum of 6 months, and a maximum. **Which earns greater interest?** A fixed deposit will earn more income on the same amount than a recurring account. You may ask why, especially since the rate of interest on both is the same? This difference lies in the theory of compounding – earning interest on interest. The more you save and the quicker you save, the more interest you earn on the interests. It is simple. **Advantages of a recurring deposit account:** Like fixed deposit accounts, recurring deposits are safe investments that guarantee good returns. A recurring deposit comes handy if you suddenly need money for meeting some emergency like paying up hospital bills in case of some major illness. Moreover, you don’t put away all your money into a deposit account all at once. You do so in installments. This helps your liquidity needs. With the money collected at the end of the tenure, you can meet both short-term goals like money for the down payment for buying a new car, a fridge, new furniture and long-term goals like saving up for higher education of children, buying a house or meeting wedding expenses of children. **So which one should invest in? A fixed deposit or a recurring deposit?** It all depends on your needs. A fixed deposit account earns interest in a compounding manner on the initial lump sum deposited. The entire amount earns money for 1 year, but in the case of recurring deposits, the first installment earns interest for 12 months, the second for 11 months, the third for 10 months, and so on until the end of the deposit term. In real time, you make more money with a fixed deposit (As illustrated by the below example), but it does not have the flexibility of a recurring deposit account in terms of being able to deposit smaller amounts as and when they become available to you. **Example for Fixed Deposit Account:-** 1. Amount invested = Rs.24,000 (lumpsum) 2. Interest rate per annum = 9% (compounded quarterly) 3. Total annual interest earned = Rs.2,234 4. Total account balance after one year = Rs.26,234 **Example for Recurring Deposit Account:-** 1. Amount invested = Rs.2,000 (per month for 12 months) 2. Interest rate per annum = 9% (compounded quarterly) 3. Total annual interest earned = Rs.1,195 4. Total account balance after one year = Rs.25,195 Thanks and Regards

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