SIP vs FD: In this news, we will compare between SIP (Systematic Investment Plan) and FD (Fixed Deposit), so that you can make better decisions while investing your money.
SIP vs FD: Many times people get into the thought of where to invest their money before investing. Actually, there are many investment options available in the market. In such a situation, people do not understand what is better for them. If you are also stuck in similar thinking and are unable to choose between SIP (Systematic Investment Plan) or FD (Fixed Deposit), then this news is for you. In this news, we will compare between SIP and FD, so that you can make better decisions while investing your money.
Understand SIP first
SIP is an investment plan in which you regularly invest a fixed amount in mutual funds. It is a disciplined method in which you invest a fixed amount every month. By investing regularly in SIP, you get good returns. Especially when you invest in it for a long term. Apart from this, you can also start SIP with a small investment. That is, you can start SIP even with just Rs 500. These are the advantages of SIP, now know about its disadvantages.
Disadvantages of SIP
Actually, the performance of SIP depends entirely on the stock market. If there is a fall in the market, the value of your investment may decrease. Especially if you want to earn good money in the short term, then you will not get much benefit from SIP.
Now understand about FD
FD i.e. Fixed Deposit is a traditional and safe investment option. In this, you deposit a fixed amount in the bank and you get a fixed interest rate on it. FD investment is risk free and your money is safe in it. That is, like SIP, it is not affected by the fluctuations of the market. The biggest thing is that the interest rate in FD is pre-determined and it remains stable throughout the period. That is, there is no change in your return and it is always available. Apart from this, you can decide the time limit of FD yourself. That is, you can choose according to your convenience. This time limit can be from a few months to a few years. The biggest thing is that the bank trusts it.
Now understand the disadvantages of FD
The biggest disadvantage of FD is the return on it. Actually, it is limited. The return of FD is very low compared to the stock market or other investment schemes. Understand it like this that the benefit of compounding in FD is limited, especially when you withdraw the interest monthly or annually. Due to this your total return can be limited. Apart from this, you may have to pay a penalty for withdrawing the amount invested in FD before the stipulated period. Whereas, there is nothing like this with SIP.
After understanding both the investment options, now it is your decision where you should invest. However, our advice is that before investing anywhere, definitely take advice on this from a good and knowledgeable financial advisor.
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