Everyone wants to grow their saved money over some time. In modern times, there are various investment options available. But you have to know which option is best for you. Every option has its terms and conditions or policies. You must have full knowledge about them so you can choose the most suitable option for you. Fixed and Recurring Deposits are the most commonly used instruments for investment.
Here we discuss the common differences between Fixed and Recurring deposits.
What is a Fixed Deposit?
via: the financial express
A fixed deposit is a one-time investment for a fixed period of 7 days to 10 years. It is the most popular and safest investment option. An investor has to deposit a lump sum amount for a particular period in a bank.
Once the tenure of the FD is over, the bank will refund your amount with interest.
What is the Recurring Deposit?
via: the financial express
A Recurring Deposit is also one of the most popular investment options. It is the most suitable investment option for salaried people. In this, the investor has to deposit a fixed amount every month for a pre-determined period.
After the maturity of the policy, the bank returns your principal amount with an earned interest.
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Difference Between Fixed And Recurring Deposits
via: Business standard
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Investment Amount
If a person wants to invest in a lump sum amount or wants to invest his big amount in a safe place, so he can go for a Fixed deposit. It is provided by any financial institution.
A recurring deposit is for an employed person who wants to do savings from his salary. He can invest a small amount of money every month in it.
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Tenure
In a fixed deposit, the tenure period is between 7 days to 10 years. An investor can select a period suitable for him.
The tenure ranges in a recurring deposit are from 6 months to 10 years. An investor can choose a period here also.
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Interest Amount
Interest earned in a fixed deposit is higher than a recurring deposit. Different banks and financial institutions have their own interest rates.
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Duration Of Interest Received
You can get interest monthly/quarterly or after the maturity in a fixed deposit. It’s up to the investor that how he wants it.
In a recurring deposit, you can only have interest and the principal account on the date of maturity.
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Who can open
Anyone with an active bank account can make a fixed deposit in any bank or financial institution. On the other hand, only a person with a regular source of income can open a recurring account.
At last, both fixed and recurring deposits are good and safe. It’s all up to the investor that what kind of investment he wants to do.