RD is a Recurring Deposit. It is in the nature of a Fixed deposit. Thus, you earn interest on it. t is for a specified term and you get back your money after the end of the term. You do a recurring deposit every month with a bank.
SIP is a systematic investment plan in mutual funds. You can choose which type of mutual fund do you wish to invest in. It can be Equity, Debt or Hybrid (mix of Equity and Debt). Like all other mutual fund investments, returns are not assured, but are likely to be much higher. Mutual Funds are more tax efficient and hence, are a better investment choice. SIP in Direct Mutual Funds is a great investment idea
