A recurring deposit offers an easier saving option that accumulates your money into a sizeable corpus for the future. We track its benefits and how to start the account.
Over the years, most Indians have remained fixated on opening fixed deposits because they offer a safe investment option. But if there is a minor quibble with FDs, it is that it serves you better if you invest a lump sum amount of money in it. You might not always have a large sum of money lying idle with you, but you would like to create a bank deposit all the same.
You should open a recurring deposit account.
How a recurring deposit helps
You might consider opening an online recurring deposit to realise short term goals. If you have a savings account with your bank, you can easily open the recurring deposit account to fund goals that have a 2- to 5-year span.
* The recurring deposit encourages you to save money every month. The bank auto debits a sum of money from your account towards the deposit. Over the deposit’s tenure, you save a good sum of money and earn interest on it.
* An easier way to fund your dreams. Not only can you open the recurring deposit online, you can also pay towards it easily. It is one of the most affordable investment options – you can pay as little as Rs 500 per month – so your other expenses are not jeopardised while maintaining the deposit. Thus, it becomes easier to pursue your dreams with a recurring deposit, without endangering your finances.
* You can liquidate the deposit or reinvest the money. If you have a recurring deposit account with a tenure of say, 60 months (five years) and you require the funds before maturity, you can choose to borrow a loan against the deposit or liquidate it. Conversely, if you don’t require the funds at maturity, you can reinvest the money for bigger gains. The recurring deposit is quite flexible in this regard.
How to open the recurring deposit account
Leading banks in India offer an easy recurring deposit account opening process. You don’t need to sign out any paperwork or even go to the bank branch to open the online recurring deposit account. Just follow these steps:
* Access your bank’s website and look for ‘Recurring deposits’ under Personal Banking>Deposits.
* Check on the recurring deposit interest rates being offered at the moment. Use the online calculator to find out potential appreciation of your investment, and if you can increase the monthly deposit amount.
* Enter the details asked for in the preliminary application form. After this, the bank will send you the final application form in your email inbox.
* Fill out the application online and attach self-attested documents as requested. Send the entire application with the documents to the bank as directed.
* The account is opened quickly after the documents are verified. The monthly deposit is auto debited from your bank account.