Recurring deposit is an ancient savings scheme that we Indians always follow. Before our current Systematic Investment Plans (SIP) of mutual funds, the recurring deposit was something well known for being a regular savings scheme with a guaranteed interest rate. Recurring deposits are very similar to fixed deposits.
With a fixed deposit, you will be saving the lump sum for a fixed tenure and interest rate. But in case of a recurring deposit, you will be investing a fixed amount each month for a fixed tenure with a prediscussed interest rate. It will grow into a lump sum at the end of the tenure. Recurring deposit is the most used investment option as it takes only a little effort each month for saving for your future.
When you are new to financing, then the concept of recurring deposit is as simple as it can be for you to understand. Experts always suggest you go for a recurring deposit investment when you are new to investing. It will help you quickly get hold of good investment habits that can help you achieve your future goals.
When you invest a fixed sum each month, it will motivate your savings discipline. When you are a salaried individual or someone who gets monthly income, then this plan will best suit you. You can start keeping a particular amount each month for savings in the recurring deposit, that can help you plan better for your future.
When compared to other SIPs like equity and mutual funds, the recurring deposit is very safe and gives guaranteed returns for your investment. When you invest in SIPs, the returns will depend on the market for its fall or rise, but that’s not the case in case of recurring deposit.
As like fixed deposits, recurring deposits interest rates are also desirable. You can calculate the interest rate for your deposit on a monthly, quarterly, bi-yearly or yearly basis that will make it more profitable for your compounding, Calculate RD interest rate by using Payrazo RD Calculator.
You will only have to submit very minimal documents for opening a recurring deposit account so that it won’t be difficult for you. Unlike other investment options, it is rapid. To the point, so it will take only some time for opening a recurring deposit account. We are offering online space to make it very easy for you to open it and start with your investment.
You don’t have to burden yourself with generating a considerable investment each month, and you can save as low as Rs.1,000 each month. It is one of the key advantages of investing in a recurring deposit you can start saving how much ever you can afford.
The most promising part of a recurring deposit is that it will understand even your single penny. When you save Rs.1,000 each month, you can save Rs.12,000 per year and think about including it with the attractive interest rate. Small investment each month will help you with getting a huge profit later.
A recurring deposit account comes with a flexible withdrawal. When your tenure is over, your money will be straight to your bank account when you don’t apply for a renewal. Whereas when you require funds or want to cancel and withdraw your recurring deposit, we will ask you to pay a certain amount as a penalty towards it. The interest they provide you will be only for the amount you deposited.
When you are initialising a recurring deposit account, you have to put a nominee for your deposit. The person whose name you fill in the nominee space will get the recurring deposit amount in case of any unforeseen circumstances.
Senior citizens get an additional 0.25% to 0.75% of interest rate on their recurring deposits that will help them grow more. Also, they have separate tax exemptions than standard individuals.
The investment tenure for your recurring deposit purely depends on your financial status and needs. When you apply for a recurring deposit, we will not influence you with the tenure, so you will have complete flexibility for choosing the tenure.
Whether you have short or long-term goals, a recurring deposit is the best option that suits both. You have to choose the tenure according to your target for better investment strategy and better results that will fulfil your goals.
Similar to other investment instruments, a recurring deposit also has many tax benefits. When your interest earned for your deposit goes beyond Rs.10,000, you have to pay tax according to your tax slab. We know that long term investments get taxed less compared to short-term ones who give out more returns.
