FD or RD? Best Use of ₹500/month for Safe Returns

FD vs RD in 2025: Know where your ₹500/month works better.

FD vs RD — One decision. Better returns

1. Fixed Deposit (FD)

FD is a one-time investment where you deposit a lump sum for a fixed period and receive interest at maturity.

Example:

Invest ₹6,000 for 1 year @7% → Get approx ₹6,420 after maturity.

Pros:

Fixed interest rate

One-time deposit

Safe and guaranteed return

Cons:

Money locked until maturity

Not ideal for monthly savings

2. Recurring Deposit (RD)

RD allows monthly deposits of a fixed amount. Interest is calculated and added at maturity.

Example:

Deposit ₹500/month for 12 months @7% → Get approx ₹6,200 after maturity.

Pros:

Easy monthly savings

Builds saving habit

Safe and reliable return

Cons:

Slightly lower interest than FD

Missed deposits may reduce benefits

RD vs FD: Comparison Table

Feature RD FD

Deposit Type Monthly One-time

Min. Amount ₹100–₹500 ₹1,000+

Interest Rate 6%–7% 6.5%–7.5%

Lock-in Period 6 months – 10 years 7 days – 10 years

Risk Level Very Low Very Low

grow your savings faster.

Conclusion:

If you already have ₹5,000+ → Choose FD

If saving monthly from salary or income → Start with RD

 Practical Advice

If you're beginning with ₹500/month, RD is ideal. After 12 months, convert the matured RD amount into an FD to grow your savings faster.

This approach gives you both:

Habit-building

Better returns later

Coming Next

Our next post will cover:

How to open FD or RD (online & offline)

Required documents

Best banks & post office plans

RD/FD calculator usage

🔚 Conclusion

₹500/month may look small — but invested right, it builds a secure financial base. Choose the right plan based on your current situation and long-term goal.