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Recurring Deposits can be your Best Friend in your Financial Life

Recurring Deposits can be your best friend in your Financial Life:-

Everybody has a idea about recurring deposit or "RD" as it it known still many investors remains confused about this plain vanilla product. 

You open a RD for a fixed tenure for a fixed amount and you earn a pre-determined interest on the amount invested.

All new investors who do not fully understand the principles behind personal finance and have just entered the world of personal finance should start with Recurring Deposits. so that their money remains protected instead of leaving funds dormant in their savings account or use them up for different purpose. By creating a Recurring Deposit, they will ensure their income is getting channeled into investments and more importantly that they earn interest on their money which will eventually lead to good investing habit. Gradually over the next 1-2 years, they can start investing in other instruments such as mutual funds, real estate or bonds.

Recurring deposits are ideal products to consider when planning short-term goals over a horizon of 1-3 yrs. These may include
a. A corpus for a down-payment of your new house
b. Education fees for your children (yearly fees paid in one shot)
c. Home Renovation expenses
d. Higher Education Expenses if you are in Job
e. Upcoming Marriage expenses due in 2-3 years
f. Setting aside funds for a annual vacation

Some important Features of RD
a. No TDS is applicable on recurring deposits, but the interest income is fully taxable in your hands.

b. You can break your recurring deposits anytime before maturity with some penalty.

c. Many Banks offer Flexi-RD also, where you can increase the amount of deposit each month (but cant decrease it)

d. The minimum tenure for RD is 6 months and maximum is 10 yrs

e. You can start RD for minimum of Rs 500 or Rs 1,000 . 

f. RD comes with Nomination Facility, so your nominee will be handed over the money if you die.

g. You can take loans against your RD for 80-90% of RD worth

h. Interest is compounded on quarterly basis in recurring deposits

Hurry Up!! Book a RD today!!

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