Systematic Investment Plans (SIPs) and Recurring Deposits (RDs) are two popular ways to build wealth over time. SIPs allow you to invest a fixed sum periodically into mutual fund schemes, which can achieve growth that is linked to the market.
On the other hand, RD is a savings scheme where a customer deposits a fixed amount every month, with pre-determined interest rates. If your goal is to accumulate Rs 10 lakh by 2028, then both options become relevant, each with its own set of trade-offs.
What Is A Recurring Deposit (RD)?
Recurring Deposit is one of the most conservative savings options. You deposit a fixed amount each month for tenure that usually varies from six months to 10 years. RDs offer guaranteed returns, with very minimal risk to your capital, thus being safer than market-linked investments. The trade-off here is that returns are modest. Interest rates on RDs range from 3% to 8.5% per annum as of 2025.
What Are Systematic Investment Plans (SIPs)?
SIPs allow you to invest a fixed amount in mutual fund schemes at regular intervals, such as monthly or quarterly. This approach helps you gradually accumulate units in the fund, benefiting from market ups and downs over time. SIPs are very suitable for long-term wealth creation, as they let you invest small amounts regularly without trying to time the market. While returns are market-linked and can fluctuate, historically, SIPs have tended to outperform fixed-income options in the long run.
Accumulating Rs 10 Lakh By 2028
The choice between RD and SIP becomes important to reach Rs 10 lakh by 2028. If you choose an RD, your expected return might be in the range of 3% to 8.5% per annum depending on the bank. That will likely make your savings grow steadily, but the growth could be limited.
If you opt for a SIP, especially in equity mutual funds, the returns could be much higher. For several funds, the long-term annual SIP returns have been upwards of 10% to 15%. By 2028, if market conditions are favourable, the power compounding could help you reach, or even exceed, the Rs 10 lakh target more comfortably than an RD. But there is risk involved too, as SIPs can suffer when markets go down, and you have no assured returns.
How Much You Need To Invest To Hit rs 10 Lakh By 2028
If you intend to create a corpus of Rs 10 lakh by the end of 2028, say December, it becomes relevant to know how much you need to invest every month in RDs and SIPs, and which of the two options can help in reaching the goal faster and easier.
Recurring Deposit
Let’s assume an interest rate of 6.5% per annum. With this return, to reach Rs 10 lakh by December 2028, which is roughly three years away, you would need to invest about Rs 25,200 per month in a Recurring Deposit (RD).
Systematic Investment Plan (SIP)
In the case of SIPs, let’s assuming an average annual return of 12%. With this rate of return, to achieve the same Rs 10 lakh target by December 2028, you would need to invest about Rs 23,300 per month. While this requires slightly less monthly investment than an RD, it carries some market risk.
Choosing Between RD And SIP
RDs are ideal if you want safety and guaranteed returns, even though you need to invest more each month. SIPs are better if you can handle market ups and downs and want higher growth with a slightly lower monthly investment.
To reach Rs 10 lakh by 2028, a SIP may help you get there with less money each month. But if you prefer certainty and want to avoid any risk, an RD is the safer choice.
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