Recurring deposits investments are offered by both banks and NBFCs in the country. It is one of the great and exciting investment options which will help individuals in managing their money effectively and increasing it. When you are a person who can save regularly, then a recurring deposit investment is the best option you can opt.
With a recurring deposit, you will be investing a fixed sum of the amount each month for a particular tenure with a prefixed interest rate. The interest rates on recurring deposits are high that of a fixed deposit; also, it will make sure to enhance your saving habit. Motivating yourself with regular savings will help you a lot in increasing your income and having a great start for your investment portfolio.
There are many financial institutions which offer recurring deposit as a tremendous financial investment tool. You should make sure to do thorough research on all the financial providers and choose the one which best ensembles your requirements and gives higher interest rates on their deposits. Only when you are sure about the financial provider, you can apply for a recurring deposit with them.
Here are some factors about recurring deposits which you should know about before opting for one:
Minimum Amount:
The amount which you can start investing can be as less as Rs.1000. It is one of the investment options which can help you when you are a salaried or an individual with lower income, and then this is the best investment option for you.
Cultivates Your Savings Habit:
As you are saving monthly, this regular investment will cultivate your savings habit. You can even make your kids open a joint account along with you and start motivating them into saving for their future. When you make your kids under the importance of savings at a young age, they can live happily in the future.
Easy To Pay:
You can directly pay for your recurring deposits each month from your savings or current accounts without any problem. You can also make sure to do an auto-debit option for making it even more comfortable and convenient for you.
Minimal Documentation:
A recurring deposit account requires very minimal documentation efforts. You will be asked only for the primary documents like address proof, ID proof, photo proof and photographs.
Save Bit By Bit:
Unlike a fixed deposit investment, you can save bit by bit each month on your recurring deposit account, which will not put much burden on your monthly finances. So when you are a person who cannot afford to make a significant one-time investment but can save small quantities each month, then a recurring deposit is the best choice for your investment.
Low-Risk Investments:
Unlike mutual funds and stocks which rely on the market for its returns, a recurring deposit is one of the low-risk investment options which you can choose. The returns for this investment doesn’t depend on the market changes, so you can rest assured that your investment will be safe.
Higher Interest Rates:
As like a fixed deposit investment, a recurring deposit investment is also offered with higher and reasonable interest rates. Each financial provider will offer different tenures and different interest rates, and you should make sure to choose the best option among them when you want to get benefited from higher interest deposits.
Fixed Interest Rate:
Unlike other investment options, a recurring deposit has a fixed interest rate throughout the tenure. So you should make sure to choose an interest rate which best suits you, and it will stay the same till the tenure ends.
Best For Short Term Goals:
When you have short term goals like funding for your vacation, higher education, renovation of a house or something like that, then a recurring deposit is the best investment option for you. When you have a timeline in the plan, then the execution can be done quickly with a recurring deposit.
No Penalisation:
When you aren’t able to pay a monthly investment amount, then most of the financial providers don’t put any penalty for you. But you should make sure to check regarding it to your financial provider before making your investment.
Additional Interest Rate For Senior Citizens:
Senior citizens who are opting for a recurring deposit will be offered with an additional 0.25% to 0.75% of interest rate than healthy individuals. The additional interest rate varies between each financial institution, so make sure to ask about it when you are applying for it.
TDS On Recurring Deposit:
Tax Deducted at Source (TDS) is applicable on a recurring deposit. When the interest which you earned on your recurring deposits is above Rs.10,000 for a year, then you will have to pay tax towards it as per your income slab.
You should submit Form 15G when you are a person above the age of 60 years when you want to avoid paying tax on the interest on your recurring deposit.
Easy To Apply:
Applying for a recurring deposit is very easy as it is now available in both online and offline mode. You can choose either of the options and make your investment quickly. You can also use the online recurring deposit calculator for calculating the investment which you can get on your deposit before applying for it.
So make sure to choose the financial provider wisely after checking on the interest rates and tenures they offer for their recurring deposit, before selecting the best one. Always make sure to choose the interest rate, which is higher than others to gain the best benefit out of your investment. Also, choose an investment provider who is certified when you don’t want to lose your deposited amount.
