Of the many financial products available in the investment market, a recurring deposit or RD is one of the oldest, most popular, and time-tested investment options. A recurring deposit account works the same for everyone and has no surprises or risks. This is why, it has been one of India’s trusted and chosen investments.
It is a non-market linked investment, which means it is free from any capital market risk and fluctuations – the bottom line being your money remains safe, and you get what you are promised. Read on to know the RD benefits and features to understand if it is the correct investment.
A recurring deposit is a savings cum investment account offered by banks and non-banking financial institutions to those who want to keep their money saved and grow it simultaneously. A recurring deposit account works on the simple principle of compounding and offers a fixed interest rate.
All you have to do is go to the bank of your choice and ask to open a recurring deposit account. The bank will inform you about the tenure of recurring deposits. It will also show you the recurring deposit interest rates applicable for the financial year in which the term of the RD ends. You can choose a tenure ranging anywhere from six months to ten years.
The RD full form means that a recurring deposit requires you to put money into the account in periodic instalments. Once you open a recurring deposit, you agree to deposit money into the account each month for a fixed tenure. So, if you open a recurring deposit account for two years, you will have to deposit money into it for 24 months. When the money gets deposited, it compounds the applicable interest rate over the years.
Here are some of the features of recurring deposits:
Nowadays, it is easy to set up a recurring deposit account. Earlier, you had the offline option where it was compulsory to go down to the bank, fill out a form, and deposit a cheque or hard cash. Now, you can avoid all that in-person hassle and save time by opening an RD account online. The online process might vary but will entail some common steps. All you have to do is:
Once you open the account, you will receive a message/ confirmation of the RD activation and payment processes.
A recurring deposit account is a very reliable way of keeping your money safe and creating consistent wealth for the short or long term. It is a very transparent and fuss-free financial instrument – and you get what you are promised from the start. If you are looking for good returns, you can opt for the ULIP policy , which offers the dual benefits of market-linked returns and life insurance coverage. L&C/Advt/2022/Jul/1688