SIP Vs FD - Which Investment Option Outsmarts Others?
There has been a common question among potential investors about the significant difference between Systematic Investment Plan (SIP) and Fixed Deposits (FDs). When it comes to choosing one of these two, it never fails to surprise people. If you are also one of them, in this article, we have tried to differentiate between the two. Let’s have a look:
What is a Systematic Investment Plan (SIP)?
2. They can also be referred to as a goal-based investment where the investors can invest at their convenience making it one of the best investment options for new/beginner investors.
3. This helps you learn about timely investments and enables you to earn a large amount of money in a certain period as it offers great returns.
4. The investors can purchase many financial objectives such as buying a house, a vehicle or planning for higher education, and many more.
5. It also allows investors to easily track the performance of their investments. Plus, if you invest in a SIP for more than a year, you can enjoy various tax benefits.
6. SIPs are related to investments in open-ended funds which means that you can withdraw and invest money at any time.
What is a Fixed Deposit (FD)?
2. It is the safest option available for investment in the finance market as it offers higher returns on the investment made.
3. There are different types of fixed deposit options offered by various banks and FIs including foreign currency fixed deposit (FCFD) designed as per the various needs of investors for fulfilling short-term & long-term financial goals.
4. One of the best things about FDs is that you get assured returns on your investments. Plus, the investments in FDs are tax-free.
5. The investors can choose the locking period for depositing their capital and amount as per their requirements.
6. If due to an emergency, you withdraw your FD before the maturity date, the bank may impose a penalty.
Both of these investment options have several advantages and these below-given points will help you differentiate between the two. Let’s have a look:
If you are willing to enjoy the convenience of flexibility in your investments with higher returns, systematic investment plans are a safer investment option for you.