Recurring Deposit (RD) vs Fixed Deposit (FD) Comparison
Analyze the mathematical difference in compounding returns when depositing money monthly (RD) versus putting in a one-time lump sum (FD). Use our dynamic comparison calculator below to run projections, adjust typical interest rates, and evaluate post-tax returns side-by-side.
Compare Investment Returns Across Assets
Analyze Fixed Deposits, Stocks, and government bonds in real-time, adjusted for inflation and local taxes.
Fixed Deposit (Bank FD)
Recurring Deposit (RD)
Detailed Asset Comparison
Compare rates, calculate returns, and adjust interest rates in real-time.
| Investment Option | Adjust Interest Rate | Expected Returns |
|---|---|---|
Fixed Deposit (Bank FD)SafeLOW RISK Fixed interest rate investment with guaranteed returns from major Indian banks.Rate: 6.00–7.75% · Typical: 7.00%Compounding: quarterly · Rate Source: Source: State Bank of India (SBI) Fixed Deposit rates, 2026 interest schedules.taxable (Section 80TTA / 80TTB):Interest is fully taxable under the individual income tax slab rates. | % Nominal | ₹1,40,577Gain: +₹40,577 |
Recurring Deposit (RD)SafeLOW RISK Monthly investment deposit scheme with fixed returns from commercial banks.Rate: 6.00–7.50% · Typical: 6.75%Compounding: quarterly · Rate Source: Source: Major commercial bank interest schedules for Indian depositors, 2026.taxable:Interest is fully taxable under the individual income tax slab rates. | % Nominal | ₹1,39,475Gain: +₹39,475 |
Opportunity Cost CalloutAlert
Choosing Fixed Deposit (7.00% Nominal Pre-Tax) over Nifty 50 index funds (12.00%) over 20 years costs you ₹5,63,990 in potential returns.
Generated by returncompare.com
Portfolio Allocation
Risk-adjusted distribution for your ₹1L investment capital
Projected Portfolio Growth Timeline
Estimated compounding trajectory using historical typical returns.
Why this allocation?moderate strategy
Balanced Income & Market Growth: This allocation is designed to provide steady growth while managing volatility. By placing 40.02% in Low Risk assets to establish a stable income foundation, 35% in Medium Risk assets for balanced accumulation, and 25% in High Risk equity assets, your portfolio captures equity market upside while remaining insulated from sharp market downturns.
Analyze Fixed Deposits, Stocks, and government bonds in real-time, adjusted for inflation and local taxes.
Comparison Matrix
| Parameter | Recurring Deposit (RD) | Fixed Deposit (FD) |
|---|---|---|
| Typical Return Yield | 6.75% | 7.00% |
| Compounding Cycle | quarterly | quarterly |
| Risk Profile | low | low |
| Tax Category | taxable | taxable |
| Lock-in / Liquidity | None (Liquid) | None (Liquid) |
| Annual Contribution Limit | No Limit | No Limit |
Pros & Cons Evaluation
Recurring Deposit (RD) Analysis
Advantages (Pros)
- ✓ Allows saving a fixed sum monthly from salary
- ✓ Builds disciplined saving habits
- ✓ Safe and predictable returns
Disadvantages (Cons)
- ✗ Yields lower absolute returns compared to FD at same rate
- ✗ Requires monthly cash flow commitments
- ✗ Interest is fully taxable under your slab
Fixed Deposit (FD) Analysis
Advantages (Pros)
- ✓ Entire capital compounds from day one, maximizing returns
- ✓ Fixed rate locked in for the entire tenure
- ✓ Safe and highly liquid
Disadvantages (Cons)
- ✗ Requires a large lump sum of capital upfront
- ✗ Interest is fully taxable, lowering net returns
- ✗ Premature withdrawal attracts minor penalties
💡 Executive Summary & Recommendation
If you have a lump sum of money, put it in an FD to maximize compounding from day one. If you are saving out of your monthly salary, start an RD to accumulate funds gradually before locking them in a fixed deposit.
Comparison FAQs
How does RD compare to FD in terms of returns?
While a Recurring Deposit (RD) and a Fixed Deposit (FD) often have identical interest rates, an FD generates higher absolute returns because the entire lump sum compounds from day one. In an RD, monthly installments compound for shorter durations as they are deposited gradually.
What happens to FD returns when interest rates change?
Once you lock in an FD, your return rate is fixed and will not change. However, when central bank interest rates rise, new FDs will offer higher yields. Conversely, in a falling interest rate environment, you face reinvestment risk, meaning your matured FD will likely be renewed at a lower rate.
How does compound interest affect investment returns?
Compound interest is the process where your investment earns interest on both the initial principal and the accumulated interest from previous periods. Over long horizons, compounding creates an exponential growth curve, which is why starting to invest early drastically increases your final maturity wealth.
What is the formula for calculating investment returns?
The formula for absolute return is: ((Final Value - Initial Value) / Initial Value) * 100. The formula for annualised return (CAGR) is: ((Final Value / Initial Value) ^ (1 / Years)) - 1. For regular contributions like a SIP, the Internal Rate of Return (IRR / XIRR) is used.