MF vs Post Office RD

POSTED BY Swapnil Chaudhary ON January 15, 2013 2:54 pm COMMENTS (16)


Could you please let me know which is the best option to invest in? I am looking for some monthly investment and thinking of MF SIP OR Post Office RD of 5 years. Which among these is safe & good option in terms of returns. I tried searching this topic on your website but could not locate it. If this is already answered by you then please send me link of that topic.

Thanks for your support!




16 replies on this article “MF vs Post Office RD”

  1. Bunker Guide says:

    If you are really a conservative investor and want to protect corpus using postal investments, then open a Post office MIS joint account with wife (Max Rs 9 Lakhs, 6 yrs). Then open a Postal Savings Account and a Postal RD account(max 5 yrs). Ask them to divert the monthly interest from MIS to Savings Account and then to the RD account. Effective yield on such investment could be better than just having MIS or RD alone. However, it will not be better than equity/balanced funds.

    1. interest from MIS and RD is taxable which will considerably lower returns.

  2. Dear Sreeram, please try to create an emergency fund of at least 6 months of your liviong expenses. After that only think of any investing. For unplanned expenses, Eq. MFs are not the ideal vehicle. Debt funds are a better choice for holding period anywhere from 6 months to 3Y.

    For anything more than 5Y holding, please go ahead with the Eq. funds opted out by you.




    I have an RD for 3K running,I wud lik to divert it in to a SIP,i have shortlisted Franklin Blue chip or HDFC Top 200 for 5 yrs…is it wise or shud I go for PPF or smethng else.

    1. If your goal is 5 years or more away then the funds you have selected are good with them.
      You could choose one of those you have listed and put a small portion in a mid- and small-cap fund like IDFC Premier equity.

      alternatively if you definitely need the money after 5 years you cold consider a balanced fund like HDFC prudence or HDFC balanced

      PPF is only suitable for goals which are 15 financial years away and that too only as part of the investments. Rest should be in equity MFs.

      Do take into account the tax on the RD interest before investing.


    I would like to invest 10k pm,can I take MF investment in equity? This amt comes after all expenses,loan and insurance. I wud use tis savings for any unplanned expenses in future.
    It shud be easily withdrawable too.

    1. For unplanned expenses please ensure 6-12 months expenses in a SB account with a FD sweep facility or a liquid debt fund. While it is good to contribute a small sum to the emergency fund it need not be 10K. Stay away from equity for such unplanned expenses.

      Use equity MFs only for specific long term (more than 5 year) goals.

  5. Dear Swapnil, please opt for EMI increase on mly basis just now. If you are going for prepay, there are some T&C for the same from HDFC.

    In case you want to go for investment of this 2-3000 Rs. amount, please invest in Eq. MFs of your choice.



  6. Dear Swapnil, why are you not increasing your EMI?



  7. If the MFs and this 2000 are for the same goal then choose a MIP like HDFC MIP Long-term-Growth

  8. Swapnil Chaudhary says:

    Certainly I will continue with these two funds for next 5-6 years, but wanted to invest Rs.2000 more per month, for that also you recommned to invest in MF?

  9. Please stay invested in mutual funds for a long duration to reap benefits

    For 5-6 years invest in capital protection funds or MIPS for tax efficient returns

    A balanced fund should also work

    HDFC prudence or balanced (less risky)

  10. First question is why are you investing?
    For monthly income? for some short term goal (less than 5 years) or long-term

    For short term goals debt mutual funds are more tax efficient than the ones you mention

    for long term goals you should invest in mutual funds. If you wish to learn how to select mutual funds you can refer to

    1. Swapnil Chaudhary says:

      Thanks for your quick reply!

      I want to invest for 5 years so as to get some amount after 5-6 years. This amount I want to use to pre-pay my home loan. Currently I have some investments in LIC, Post Office Monthly Investment plan, MF SIP etc. plus have term insurance.

      I have DSP BlackRock Top 100 Equity Fund – Regular Plan – Growth & HDFC Prudence Fund – Growth MF with SIP of Rs. 1000 each /month. But when I see the returns which I got in last 18 months (started in July 2011) is not that much attactive (my assumption) . Amount I invested in this so far is Rs. 36000 and current balance it is showing Rs. 38600/- . Thats why thinking wheather MF is better OR post office investment?

      1. Ramesh says:

        You want to invest in an 8% instrument to get rid of a 10.5% loan.

        Mathematically, you are making a loss of 2.5% straight away and very surely.
        It will be probably a better idea to:
        1. Either prepay faster, say every 6 months or so, rather than after 5 years. OR
        2. Do not prepay at all and keep this money as an investment kitty.

        The other way is to invest in an instrument which CAN provide you more return than 10.5% possibly in a few years time like equity or equity oriented funds (DSP Top 100 and HDFC Prudence are very decent ones. Just continue in them).

        1. Swapnil Chaudhary says:

          I agree with Ramesh & Ashal

          It will be good idea to pay in regular intervals or increase EMI. Can I prepay 2-3 times in a year? Also I have taken loan 4 months back so can start re-pay immediatly OR I can do so after 1 year (I have HDFC Bank home loan).

          This portal is really awsome and your peoples are so quick in giving replies. This is truely great help. I recommend your site to every friend. Appreciate your knowdledge.


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