Schemes like SIP and Post Office RD are excellent options for people who want to invest small amounts regularly. Both require a fixed monthly deposit. For those who prefer guaranteed returns, Post Office RD might be a better choice.

However, if you wish to get higher returns, SIP could be more suitable. Financial experts suggest that long-term SIP investments can yield significant profits. Let’s find out which investment choice will offer you more benefits with a monthly investment of Rs 5000 over five years. 

Post Office RD benefits

Both banks and post offices offer RD schemes. Banks provide RD options ranging from 1 to 10 years, while the Post Office RD scheme is fixed at 5 years. If you invest Rs 5000 monthly in the Post Office RD for 5 years, you can build a substantial fund.

Over the 5 years, you will invest a total of Rs 3,00,000. At an interest rate of 6.7%, you will earn Rs 56,830 in interest, resulting in a total of Rs 3,56,830 after 5 years.

What benefit will you get from SIP?

While SIP investments are not guaranteed, experts estimate an average return of 12 percent. Thanks to compounding, this amount grows quickly. For example, if you start an SIP with a monthly investment of Rs 5000 for 5 years, your total investment of Rs 3 lakh could generate Rs 1,12,432 in interest at a 12 percent return.

After 5 years, you will have generated a total fund of Rs 4,12,432. This is higher than the return compared to RD. If the return exceeds 12 percent, the benefits could even be higher.