SIP vs Recurring Deposit (RD): The Ultimate Showdown
Author: SIPCalc Editorial TeamPublished: May 19, 2026Updated: May 19, 2026
Educational content only. Examples are illustrative and should not be treated as personalized investment advice.
“For decades, Recurring Deposits (RDs) have been the go-to saving tool for salaried Indians. However, Systematic Investment Plans (SIPs) in mutual funds have revolutionized wealth creation. Let us dive deep into which one is better.”
Understanding RD and SIP
A Recurring Deposit is a traditional bank product where you deposit a fixed amount monthly at a predetermined interest rate. SIP, on the other hand, invests your money in mutual funds linked to the stock market or debt instruments.
Return Potential and Inflation
RDs offer fixed returns (currently around 6.5% - 7.5%), which are fully taxable. After inflation (around 6%), the real return is almost negligible. SIPs in equity funds historically offer 12-15% over the long term, easily beating inflation and creating real wealth.