Abstract

Setting aside a fixed amount of money every month specifically for savings or investment is the best way for wealth maximization. If the question where to invest arises, then everybody probably recommend Recurring Deposits (RD) of banks. For people willing to invest a fixed amount every month rather than a making a single time investment of a huge amount, there are many alternatives with potentially higher returns are available. One such alternative is the Systematic Investment Plan (SIP) which is offered by mutual fund houses. The product works same as bank Recurring Deposits, the difference being, SIPs invest in capital markets which include equity and debt instruments. SIP and RD serve the purpose of long-term wealth creation, and are popular savings plans among retail investors. But, the question here is which of the two modes of investment is better than the other? RD or SIP? This question necessitates the need to compare the benefits of RD and SIP to help the investors to evaluate the differences and make a prudent decision in opting for the investment solution that would best suit their interest. Thus, the primary interest of this paper is to shed light on the differences between the systematic investment plan and recurring deposit, and to help people achieve their long term financial goals and maximize their wealth.