What are the risks of putting money into a Recurring Deposit?

  • Recurring Deposit
  • 3 Months ago
What are the risks of putting money into a Recurring Deposit?
HIGHLIGHTS

  • What is a Recurring Deposit?
  • What Are The Key Benefits Of Investing In Recurring Deposits?
  • What Are The Risks Of Putting Money Into A Recurring Deposit?


What is a Recurring Deposit?

Recurring Deposit, commonly known as RD, is an ideal and risk-free investment option involving periodic payment of a fixed sum of funds with a financial institution for a predetermined tenure. The investor can choose the tenure as per his needs and invest a fixed amount each month while earning decent interest.

What Are The Key Benefits Of Investing In Recurring Deposits?

1)Inculcate the habit of saving regularly: Recurring deposits are a saving-cum-investment instrument as you must make regular instalments.

2)Returns are guaranteed: Investment in recurring deposits is safe as it is not affected by market risks. The returns are guaranteed in this risk-free recurring deposit investment.

3)Small monthly deposit amount: Even individuals who do not earn substantial income can invest in recurring deposits. The minimum amount required to be deposited monthly can be as low as Rs.1000.

4)Provides flexibility: You can select your investment tenure as per your goals. It facilitates flexibility in several aspects as it includes the regular deposit factor along with the interest component.

5)Simple documentation: The documentation process is simple, and the option of online registration allows you to open an account from the comfort of your couch. 

What Are The Risks Of Putting Money Into A Recurring Deposit?

Managing investment portfolio risk is an important element in capital safety and appreciation.

If you are looking for safety of capital, then investment in one of the best risk-free investment options, such as recurring deposits, would be an ideal decision.

Let’s understand the risks of putting your money into a recurring deposit:

1)Recurring Deposits are not subject to market risks: When you invest in recurring deposits, you will receive the full monthly amount deposited along with interest at maturity. The value of recurring deposits is not affected by market conditions like other investment options such as mutual funds and equity shares.

Hence, recurring deposits is one of the safest investment options available, and it is not subject to market risks.

2)Risk of investing in the recurring deposit scheme of an institution that is not credible: You should invest in a recurring deposit scheme of only a reputed financial institution. Compare the schemes of institutions in the segment and select a trustworthy company that offers you the best interest rate on your investment. It’s not advisable to select a company without conducting thorough research.

Hence, you should select a brand that you trust. Shriram City's Recurring Deposits are credible as it comes with a "MAA+/ with Stable Outlook" rating by ICRA. This indicates high credit quality and stability. Open your recurring deposit account

3)Risk related to premature withdrawal: There could be a case where the investor requires funds and wishes to withdraw the deposited amount before maturity. In such a scenario, the financial institution may levy a penalty for premature withdrawal or give the depositor the sum without the interest component.

Hence, it is important to understand the recurring deposit premature withdrawal norms of the company before investing. The Shriram City Recurring Deposit withdrawal norms are as follows:

a)Up to 3 months from the date of deposit/renewal (Lock-in-period) - No repayment except in the event of the death of the depositor.

b)After 3 months but before 6 months - No Interest

c)After 6 months but before the date of maturity - The interest at 2% lower than the interest rate applicable to a deposit for the period for which the deposit has run or if no rate has been specified for that period, then 3% lower than the minimum rate at which the Shriram City accepts deposits.

Shriram City Recurring Deposit

While selecting the best risk-free investment, you should also consider the best company for recurring deposit investment. Shriram City is a trustable company for recurring deposit investments as it has developed expertise in the industry, and the recurring deposits offered are of high quality.

Recurring Deposits are a contract between you and Shriram City for the approved interest rate from the date of investment till maturity. This unique term deposit offered by the company allows you to make regular monthly deposits and earn the best in segment returns on your investment. 

What Are The Key Features Of The Shriram City Recurring Deposit?

1)High Returns on Recurring Deposits: It will become easier for you to achieve your goals and build wealth when your investment offers you the best rates and stable returns. Shriram City offers the best interest rates on recurring deposits up to 8.75%, which varies per the chosen tenure.

Shriram City Recurring Deposit Scheme Interest Rates pertaining to the selected tenure are as follows:

Period (months)

Rate % (p.a. at Monthly rates)

Maturity Value*

12

7.28

6,240

24

7.37

12,965

36

8.43

20,540

48

8.59

28,720

60

8.75

37,750

*The maturity value is for the monthly installment of Rs.500/- 

2)Flexible Tenure: Shriram City offers flexible timeline options from 12 months to 60 months in its risk-free recurring deposit scheme. You can choose the tenure and the regular monthly investment amount as per your financial goals. For example, if you have a big event planned in three years, you can select the 36-month recurring deposit tenure to finance the event. 

3)Flexible Pay-outs: You can choose from the Auto Refund and the Conversion to Fixed deposit option at maturity.

a)Auto Refund option enables customers to withdraw the matured recurring deposit amount to the depositor’s bank account on the date of maturity. This is suitable in case you have a planned event or require to incur big expenses such as marriage or child’s education fees.

b)Conversion to Fixed Deposit is ideal for investors who do not need immediate funds and want only additional benefit of Shriram City’s high-interest rates Fixed Deposits. 

4)Shriram City Online Option: Documents such as Self-Attested ID Proof, Self-Attested Address Proof, Photographs, and Cancelled Cheque Leaf must be submitted to the company. Shriram City offers you the option of opening your account online, making it easy, time-saving, and convenient. Open your recurring deposit online. 

5)Minimum monthly deposit amount: Recurring deposits will be accepted in multiples of ₹ 500/- subject to a minimum amount of ₹ 500/- per installment.

How Can Investment In Shriram City Recurring Deposit Help You To Mitigate Risk?

Shriram City Recurring Deposit facilitates mitigation of risk as it offers generous interest that can help you beat the inflation rate, making it the best company for recurring deposit investments.

You should use a recurring deposit maturity calculator to evaluate if your monthly installments are sufficient to finance your goals in the future. The Recurring Deposit Maturity Calculator from Shriram City will help you calculate your recurring deposit returns, interest rates, and maturity. 

Key Takeaways

Recurring Deposits is one of the best risk-free investment options that provide safety of capital and inculcates the habit of saving. It is imperative to invest in a trustable company for recurring deposit investments offering a good return on your investment.

Invest Now in the recurring deposit scheme offered by Shriram City Union Finance Limited.