Tips for Students and Professionals on Recurring Deposits
Recurring Deposit 6 Months ago Comments Share
The growing awareness about investment has led to people these days starting their investment journey early and proactively. This trend is particularly prominent among students, most of whom have become aware of the perks of starting early. Apart from students, professionals are also cultivating investment habits. If we talk about relatively safer avenues for investments, fixed deposits come to the forefront. But the interest offered by them hardly covers inflation. Therefore, apart from fixed deposits, recurring deposit accounts are also popular as saving instruments and are provided by most banks and financial institutions. Recurring deposits for professionals and students can help reduce their overall portfolio risk.
Tips for Students and Professionals
If you are a student or a professional, then you should consider having recurring deposits in your portfolio. Keeping the capital intact becomes important to stay motivated at the initial stage and this is why recurring deposits for students are beneficial. The features and benefits that recurring deposits carry, outweigh most of the other secured as well as government investment schemes. The application procedure is simple, and returns are assured. Below mentioned are the features and benefits of investing in recurring deposits:
Features of Recurring Deposits
As an RD advice, it becomes important to understand the features of recurring deposits before investing in the same:
Rate of interest:
The rate of interest offered by recurring deposits is better than savings accounts. It also provides better flexibility than fixed deposits. It is usually variable and depends upon the bank. The rate of interest offered is between 5% to 8%.
Term of deposit:
The tenure of investment is between 6 months to 10 years.
While the minimum investment may vary according to the bank, in some banks, it may start as low as Rs. 10.
Frequency of interest accrual:
Interest accrual usually takes place quarterly in most banks.
Partial withdrawal or withdrawal during the mid-tenure of the recurring deposit is not allowed.
Premature account closure:
Banks and financial institutions may allow premature account closure. However, it is subject to a penalty in most cases.
Loan against deposits:
Loans can be availed against recurring deposits. Banks usually finance up to 90%-95% of the balance in the recurring deposit account and the deposits are considered as collateral.
Deposits in recurring deposit accounts are usually done by transferring the amount to the account. However, in case the investors find it inconvenient, then instructions can be provided to banks to deduct the amount from a linked account and transfer it automatically to the recurring deposit
Benefits of investing in RD
Following are the benefits of investing in a recurring deposit account:
Inculcate savings habit:
Recurring deposits have been instrumental in inculcating savings habits among investors. As it involves the monthly transfer of amounts into the RD account, it creates a discipline of savings among the investors.
Fulfillment of goals: Recurring deposits
can be used to fulfill your financial goals, especially the short-term ones. As there is no risk of losing the capital, RD accounts can be used to save for your dream vacation, buying a house, marriage planning, or buying your dream vehicle as well.
Protection from volatile interest rates:
RD interest rates are fixed. As interest rates usually fluctuate after every interval, recurring deposit accounts usually offer protection against fluctuating interest rates. This, in turn, provides assured returns to the investors.
Protection of capital:
As the RD schemes offer assured returns, it is least affected by market fluctuations and volatility. Therefore, the capital remains intact, thereby reducing the investment as well as overall portfolio risk.
Open for a large section of people:
As the minimum amount of investment is low, a recurring deposit account is a great tool for investment, especially for people who can allocate only a small portion to investment like students and people with low income. This increases its reach to a large section of people, also explaining why along with students, recurring deposits for professionals are also popular.
Shriram City Recurring Deposit
Shriram City Recurring deposit, apart from the above features, offers the following benefits on recurring deposits for students, professionals, and other investors:
Rate of interest:
While the range of interest rates on recurring deposit accounts is usually between 5%-8%, Shriram City provides an interest rate of up to 8.5% per annum to its recurring deposit
Auto refund or conversion to FD:
RD account holders are provided with an option at the time of maturity to either get the refund of the maturity value or get it converted to a fixed deposit. This is especially beneficial for those investors who do not require funds and want to stay invested. The fixed deposits will continue to get renewed automatically as per the instructions specified under the maturity instructions in the application form unless contrary instructions are received.
Flexible premature withdrawal norms:
Shriram City provides flexible pre withdrawal norms for recurring deposit account holders. While the first 3 months come under a lock-in period where premature withdrawal is not allowed, account holders can withdraw after those 3 months. However, for withdrawals after 3 months but before 6 months, no interest will be paid. For withdrawals after 6 months but before maturity, interest will be reduced by 2%/3% on a case-by-case basis.
Recurring Deposit Calculator
If you are willing to pre-determine the maturity value before investing in a recurring deposit account, you can use a recurring deposit calculator. By just entering your monthly investment amount and tenure of investment, you will get an approximate idea of the maturity value you will get. This will facilitate easy comparison between various schemes.
Shriram City Recurring Deposit Advice
As inflation is on the rise, it becomes increasingly important to park your funds in avenues that beat inflation. As the interest rates on a savings bank account are taking a dip, leaving your excess funds there only depreciates their value. This also applies to fixed deposits. Therefore, recurring deposits are one of the best avenues to look after for appreciating your funds in line with reducing your portfolio risk. Especially for students with little savings, growth while keeping your capital intact becomes increasingly important which is best catered by the recurring deposits.
Recurring deposits can be a great start for your investment journey. Especially if you are a student new to the investing world or a professional who finds investing difficult or willing to reduce the existing portfolio risk without compromising on returns, recurring deposits are what you should be looking for. Assured as well as attractive returns is a hard combination to find in a single instrument.
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