Good Bye To RD Investments, Warm Welcome to SIP - Smart Indian Prosperity - MYREALITY.In, Real Estate, Share Market, Mutual Fund, Insurance
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Friday, October 06, 2017

Good Bye To RD Investments, Warm Welcome to SIP - Smart Indian Prosperity

Good Bye To RD Investments, Warm Welcome to SIP - Smart Indian Prosperity

by Mr. B. Padmanaban, CFPCM
Certified Financial Planner

We can always compare SIP versus RD because both are systematic investment plan. 

SIP returns are variable and RD is fixed. Our investors have the experience of RD for so many decades. Normally RD is used for yearly commitments like school fees, insurance premium, vacation so on and so forth.

This particular money still goes to RD because it is difficult to take a call on one year SIP investments so we lost the opportunity. Some of us take that money in a liquid fund SIP, which is better than RD.

I found some interesting strategy, and it will work all the time!!!

Instead of taking money from RD every year, if we advise our client to postpone for one year which means next year they have to manage with their existing funds. Instead of 2nd year, 3rd year onward we can give the money to the client needs.

There are many advantages by doing this when it is SIP in mutual funds. There is no exit load and capital gain after one year. By doing this, year on year client can fulfill their annual commitments as well as they generate more returns.


I have considered IDFC Premier Equity which is one of the consistent funds, and it works for other funds as well especially mid cap oriented funds. The data point I have taken is real and I have started the SIP where the market is all time high in Jan 2008 and continued till today.

I have taken Rs. 2,000 SIP per month in case of 8% RD (Maximum I can assume), it would be Rs. 25,131 only.

Whereas, this strategy helps the investor to take Rs. 27,000 year on year from 2nd year onwards. This 27,000 comes to 25.39% return against 10% in RD!

After 8 years of withdrawal, the value still remains Rs. 1,60,700 whereas I have kept one year money only. All the RD money should be replaced by MF Equity SIP.

P.S. This is possible for all the mid-cap funds in a longer period. I have started this SIP illustration when the market is all time high after that market fell more than 50%. You can’t imagine the worst possible scenario than this…


B. Padmanaban, CFPCM
Certified Financial Planner
9884349173


Good Bye To RD Investments, Warm Welcome to SIP - Smart Indian Prosperity Reviewed by S. Chitra on October 06, 2017 Rating: 5 Good Bye To RD Investments, Warm Welcome to SIP - Smart Indian Prosperity by Mr. B. Padmanaban, CFP CM Certified Financial Planner ...

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