Do you want to invest your earnings in the stock market, but are afraid to invest due to the fear of loss. So we will give you complete information about SIP vs FD. We will tell you about SIP vs FD, what to invest in, which is right for you, can you incur losses, what is the difference between the two.
What is SIP and FD
Systematic Investment Plan (SIP): It is a medium to invest in mutual funds. In this you can invest in both lump sum and small amounts. Its payment will be made directly from your bank account on the fixed date.
The amount invested by you will give you a huge profit in the form of profit after a certain period of time according to the movement of the stock market. Therefore, choose Mutual Fund/SIP as per your discretion, so that you can achieve your future goals.
Fixed Deposit (FD): Traditionally the most trusted investment instrument of Indians. It is a medium of lump sum investment, on which a fixed interest rate is given. This interest rate is decided by the bank or non-government bank at the time of opening the account.
Fixed deposits are available for different tenures, ranging from 7 days to 10 years. It has guaranteed benefits which can be received at the end of the policy.
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Difference between SIP vs FD
1. Method of investment
In Fixed Deposit (FD) a lump sum amount is invested whereas SIP is a two-way instrument in which the amount is invested in lump sum and monthly or quarterly. In this, a big fund can be created with a small amount.
2. Benefits received
Fixed Deposit (FD) offers a fixed return on the amount invested which is settled at the time of opening the account.
The profit on the amount invested in SIP depends on the movement of the stock market.
3. Risk in investment
The amount invested in FD is invested at a fixed rate without any future risk, but investing in SIP can be risky as it depends on the fluctuations of the stock market.
4. Investment goals
People have made a safe bet on FD that it will give definite profits in the future. In SIP, investors invest their money for potential profits.
5. Withdrawal
The amount invested in FD is kept till the fixed maturity time. If the amount is withdrawn before maturity, a penalty has to be paid. There is no such fixed rule in SIP. It can be easily removed as per requirement.
Which is better SIP vs FD?
Both mutual funds/SIP and fixed deposits are investment instruments. If you want to get benefits from your savings capital at short term rate without taking any risk then FD is a suitable option for you. On the contrary, if you are a strong investor who wants to get high profits by keeping the amount for long term. so for youSIP would be a suitable option.
Where should I invest my money, in SIP or FD?
People often ask where should I invest my money. Let us try to know the answer. The financial condition of everyone is not the same, some earn Rs 1 lakh per month while others survive on Rs 10,000. Therefore, depending on your financial situation, financial goals, risk appetite and financial results. You can get investment units in FD and SIP as per your tolerance.
Can SIP and FD lead to losses?
1. Can SIP lead to loss?
In simple words, yes. SIP can lead to loss. This happens when the value of the stocks or assets invested in by the fund starts falling and the net asset value you invest falls below the net asset value at the time of purchasing the amount. Everything depends on the movement of the stock market.
2. Can FD lead to loss?
Generally this does not happen. While getting FD, financial institutions enter into a fixed contract with you. According to which you are given fixed benefit. If you break your FD before its maturity, you will definitely be charged a penalty.
conclusion
Thus we discussed SIP VS FD in detail. We learned why SIP gives more returns than FD and which investment is good for us. Therefore, you can get profit by investing your capital at a suitable place.
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