Want to add ₹15 lakh for marriage? SIP or RD, know which is best for you, simple calculation

Wedding means band, musical instruments, procession… and a lot of expenses! From decoration to food and clothes, we don’t even realize when lakhs of rupees are spent. In such a situation, the biggest question that arises is where and how to save money for such a big expense?

Nowadays, two ways are most popular: A simple and safe way, which we call RD (Recurring Deposit). And another slightly modern and more beneficial way, which is called SIP (Systematic Investment Plan).

Let us understand both of them in very simple language and see which way is best for your wedding planning.

RD means your own piggy bank, but the bank one.

RD is the simplest method. You deposit a fixed amount (say ₹ 5000) in the bank every month and the bank gives you fixed interest on it.

• Biggest advantage: There is no risk in this. Whether the stock market goes up or down, it has no impact on your money. You know in advance how much money you will get after 5 years.
• Weakness: It has a slightly lower interest rate (about 6.4%), so the money grows slowly.

In one line: This is a simple, reliable and safe way, in which there is no tension.

SIP means sensible modern way

SIP is a bit modern and sensible player. In this, you invest a fixed amount every month in a mutual fund, and this money is invested little by little in good companies of the stock market.

• Biggest advantage: In this “The Magic of Compounding” It works, that is, you get interest on interest also. In the long run, it can give much higher returns than RD (on average 12% or more).
• Weakness: There is some risk in this because it is related to the stock market. It is possible that if the market falls, your money may also reduce a little, but the chances of profit in the long run are high.

In one line: This is a bit risky but the most profitable path in the long run.

Head-to-head clash: Direct calculation of SIP vs RD

Let’s do a real calculation.

Target: in 5 years ₹15 lakh Add.
Monthly Investment: ₹18,000

Result of RD (Recurring Deposit):

• Total deposit you will make in 5 years: ₹10.8 lakh
• You will get interest on this: Approximately ₹ 1.94 lakh
• Total amount after 5 years: Approximately ₹ 12.74 lakh

Result of SIP (Systematic Investment Plan):

• Total deposit you will make in 5 years: ₹10.8 lakh
• Estimated profit on this (at 12%): Approx. ₹4.04 lakh
• Total amount after 5 years: Approximately ₹ 14.85 lakh

The decision is before you!

If we look at simple calculations, for the same amount of money and in the same time, SIP earned about ₹ 2.1 lakh more than RD. If you had invested the same money for 10 years, the difference would have been even greater.

So what should you do now?

It completely depends on your thinking:

1. What is RD for? If you are the kind of person who says, “Brother, I don’t want any tension, even if I get two rupees less, my money should be safe.” Then RD is made for you.
2. What is SIP for? If you are willing to take a little risk and want your money to work for you and grow faster, then SIP is the best option for you.

Smartest move: Many people invest a little money in both. This also provides security and money grows faster.

So before planning your wedding, decide whether you want to take the safe route or take a little risk and earn more.