Why are fixed deposits a better investment option than recurring deposits? - Make Money Online

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Why are fixed deposits a better investment option than recurring deposits?

If you are having some extra funds in hand and if you are confused about what should be done with it, then investing can be a good option to go for. It’s usually seen that people end up spending these extra funds or saving it. But investing these extra funds can benefit you with extra profit. Going for an investment can help you earn more funds over that extra fund as investing replicates your money.

There are various investment options where you can invest in. You can either invest in a high-risk investment or a low risk one. Mutual funds, gold, shares are the investments which involve high risk but also offer you with high returns. Whereas fixed deposit are low risk investment and are considered as much safer investment. The returns that you receive over your fixed deposits is high compared to a savings account.

As fixed deposit investment is not depended upon the market rates the investment is considered as much safer one. Generally, the returns offered on fixed deposits are fixed and don’t tend to change. Whereas the interest rates on high-risk investment options usually keep on fluctuating. One can face loss in the high risk involved investment if the market rates fall down. Fixed deposits are considered a much safer investment than other investment options.

Now when it comes to investing in a safer option fixed deposits are not only the investments wherein one can invest. You can also invest in recurring deposits as this is also considered as a safe option for investment. Many times you can get confused where to invest in when you land up to these two different and very good investment options. Though they both are a low risk involved investment they do differ from each other. 

     Interest rates on fixed deposits and recurring deposit:
You can either approach banks or Non-Banking Financial Institute (NBFC) when you want to invest in fixed deposits with high rate of interest or recurring deposits. The interest rates offered to you on both the investment options are generally high. But the interest offered to you is fixed throughout the investment tenure. If you are investing in NBFCs then the interest rate offered to you will be much higher than the interest rates offered to you by the banks. 

     Taxation:
The taxes charged on both are often similar. You are generally charged interest rates on your total income as the returns that you receive are added to your income. So the tax that you pay on your investment, whether it is a fixed deposit or recurring deposit, is added on to your personal income tax. But there is a slight difference between these two when it comes to a tax deduction. If the interest offered to you on your fixed deposit by the bank exceeds INR 10,000 then you are asked to pay taxes. Which is not the case in a recurring deposit. You don’t have to pay any tax in recurring deposits if you get high interest on your deposits. This attracts many investors towards recurring deposit investment.

     Which offers you higher returns?
If recurring deposit and fixed deposit investment are compared then fixed deposit investment gives you higher returns. Suppose you invested INR 24, 000 in fixed deposits and in the recurring deposit you invest INR 2, 000 per month. And both the investments offer you with an interest rate of 9% which will earn you a return about INR 2, 234 on fixed deposit and INR 1, 195 on recurring deposit? This gives you a clear view that investing in a fixed deposit can earn you more returns than an investment in recurring deposits.

Investments are done by one to earn higher returns and if you are not getting good returns the investing your funds for a low return would be a waste. So investing in fixed deposits in any day a better option as you earn higher returns on it.
Why are fixed deposits a better investment option than recurring deposits? Why are fixed deposits a better investment option than recurring deposits? Reviewed by Parvesh Bravo on 9:16 AM Rating: 5

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