To achieve the various financial goals that one has set for oneself, one needs to choose the right investment vehicle. Given the present market volatility, investors are looking at some risk-free investment vehicles to appreciate capital such as Recurring Deposits. However, are Recurring Deposits really worth investing in when compared to SIPs? This mutual fund agent in Kolkata investigates.
A recurring deposit is a kind of debt instrument that banks offer to people with a capital guarantee. Just as one invests monthly in SIPs, one needs to do the same for a recurring deposit. Here are some properties of RDs that make them such a useful investment tool.
Investing in RDs makes one disciplined in investing. One needs to have money at the end of the month in order to invest in either of these vehicles.
The RD is not tax-free and both the investment amount as well as the interest are taxable at the given rate.
You can stop investing in RD at any time, although some banks may charge penalties for premature withdrawals. However, they come with a lock-in period of 1-10 years. You cannot withdraw your investment before the tenure ends.
However, according to this mutual fund agent in Kolkata, SIP investment in mutual funds is a tad better because it allows you to invest in equity. Equity instruments are a faster way to appreciate capital than are debt instruments.
SIP investment in equity mutual funds work better in the long term of investment, that is for around five years or more. The only type of SIP that comes with a lock-in period is ELSS, that comes with a lock-in period of around 3 years. So SIPs prove to be more flexible investment vehicles than Recurring Deposits.
Furthermore, according to this mutual fund agent in Kolkata, since RDs offer capital protection which is useful in the short-term of investment. However, there is no assurance of capital protection while investing in mutual funds.
This is a personal call that you need to make. While RDs may seem like the safer option, debt mutual funds are also a good option as you can opt for tax breaks when you invest in them. Moreover, RDs are taxable which isn’t good news.
If you are looking for proper advice regarding which of these instruments to choose, you can get in touch with mutual fund agent in Kolkata, Money Assist. We will help you to understand and create a portfolio that helps you to achieve your financial goals.
Reach out to us today and understand which mutual funds you can invest in. Doing so can help you save money for your future requirements and present needs.
