What things should you keep in mind before investing in Recurring Deposits (RD)? This video will tell you.
Recurring Deposits or RDs are considered to be a good instrument when it comes to consistent investments. In an RD, you invest a fixed amount every month during a predefined tenure, and at the end of the tenure you get back the entire investment amount along with a fixed interest income. You can easily open an RD account in most banks in India. This is an extremely low-risk instrument where investors get complete clarity on how much they need to invest for how long, and how much will they earn as returns at tenure maturity. RDs are available in tenures mostly ranging between 6 months to 10 years. The returns, going by current trends and according to your chosen bank and tenure, are in the range of 5-7.5%. Senior citizens get preferential rates which are mostly 0.75% higher than normal rates. The interest is compounded and gets credited to an investor’s account on a quarterly basis.
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