New Delhi, May 10 -- Both fixed deposits and recurring deposits, more commonly known as FDs and RDs, are low-risk investment instruments with guaranteed returns as per a bank or post offices' pre-determined rate of interest for a particular tenor.

Fixed deposits allow you to allocate a lumpsum amount to a financial institution for a fixed period of time and for a fixed rate of interest. FDs also tend to have higher interest rate than simply parking your money in a savings account.

Meanwhile, recurring deposits allow you to start a deposit for a fixed amount monthly, which runs for tenure and rate of interest. Also, higher returns that a simple savings account, RDs have lower returns compared to FDs due to the power of compounding.

The ...