Bank Recurring Deposit vs Systematic Investment Plan

Difference between Equity Linked Savings Scheme and Rajiv Gandhi Equity Savings Scheme

Basis of DifferenceBank Recurring Deposit (Bank RD) Systematic Investment Plan (SIP)
TypeBank Account
Vs
Mutual Fund
ObjectiveTo induce a habit of regular saving
Vs
To induce a habit of regular saving and
good long term capital appreciation
MeaningAn account in which the investor needs
to deposit the pre-specified amount at
periodical intervals for a long term
Vs
A long-term instrument which generates
tax-efficient maturity
Investible amountIn instalments- usually monthly
instalments
Vs
In instalments- usually monthly
instalments
Maximum Investment AmountNo such limit
Vs
No such limit
Interest RatesVaries from bank to bank- dependent upon
tenure
Vs
Dependent on debt and equity markets and
is also based on the fund scheme chosen
by the investor
Interest Rates
Compounding
Quarterly
Vs
Daily
Interest earned is
taxable
Yes, as per investor's income tax slab
Vs
No- in case of Equity MF and Yes- in
case of Debt MF
LiquidityYes
Vs
Yes
Tenure6 months to 10 years
Vs
Generally 3 years or above
Income Tax Rebate u/s 80CNo
Vs
Yes, upto Rs 1,50,000/- p.a., if
invested under ELSS
MaturityTaxable
Vs
Tax Free, in case of Equity MF and
withdrawn after completion of 1 year
from the date of investment
Premature WithdrawalsEntire amount, anytime but after
charging a certain penalty , banks
generally charge 1% as penalty. Partial
withdrawals are not allowed
Vs
Entire amount, anytime but after
charging a certain exit load , mutual
funds generally deduct 1% exit load.
Partial withdrawals are also allowed
LoansLoan facility available upto 90% of the
deposit value in the RD where the RD
needs to be pledged as collateral and
the interest rate to such loan is around
0.5% to 2% higher than the fixed deposit
rate
Vs
No
Tax Deduction at SourceYes, at the rate of 10% on interest
earned, if it exceeds Rs. 10,000 in one
financial year. To avoid TDS, investor
can submit Form 15G (for age below 60)/
Form 15H (for age above 60).
Vs
No
RiskLess risky as compared to Equity
oriented SIP
Vs
More risky as compared to Bank RD
Periodic incomeNo
Vs
No

Upcoming Bank Holidays

2018 April 30 is a bank holiday in Andaman And Nicobar Island due to Buddha Pournima.
2018 May 01 is a bank holiday in Andaman And Nicobar Island due to Maharashtra Din/May Day.
2018 May 09 is a bank holiday in Andaman And Nicobar Island due to Birthday Of Rabindranath Tagore.
2018 May 16 is a bank holiday in Arunachal Pradesh due to State Day.

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