RDs with banks or SIPs with mutual funds?
DSIJ IntelligenceCategories: MF Unlocked, Mutual Fund
There are a lot of investment products and avenues available in the market. From fixed deposit (FD) to equity, we are surrounded by a wide range of investment options. In these situations, it is imperative for us to understand, which investment type suits our financial goals the best. For middle-class investors, investing a big amount at once is not that easy. Smaller investments at regular intervals, such as recurring deposits (RDs) with banks and systematic investment plans (SIPs) with mutual funds, are most convenient and apt for them. However, the question, here, arises, that which type of investment should you go with – RD or SIP? Let’s find out!
The psychology of people is like that they are mostly concerned about returns and not the risk. Usually, they are in search of such products, which give them high returns but with low risk. However, that is just an illusion. There are no such products available in the market. This is the reason why people should seek experts’ advice. They can help them in making better investment decisions.
In general, we get a lot of queries from people, confused about whether to go with RDs with banks or SIPs with mutual funds. The answer is, it depends on a number of factors, such as your risk profile, investment objective, and investment tenure you have decided on. As it is rightly said that no size fits all, no product is equally useful for every individual. For example, if someone is conservative then the return on equity, no matter how high, would not be his prime concern; he would be more concerned for the protection of his capital as he cannot take higher risks. Similarly, if someone wants to make instant money, he cannot rely on equities as equity is one of the most volatile asset classes in the short-term.
Thus, investment in RDs are for conservatives, who cannot stomach even the minor of the risks, involved in mutual fund investments, and for others, who possess risk-taking capabilities, should opt for mutual funds, as they would be able to provide better risk adjusted returns.