You can choose FDs of different maturities which will mature in different tenors. You can adopt this method according to your convenience. Let us know its complete process.
FD laddering technology is a great option
The country’s largest public sector bank SBI levies a penalty of half a percent on premature break of FD up to Rs 5 lakh. Now let’s understand with example.
- Suppose you are getting an FD of Rs 5 lakh for 5 years, then it is better that you do not get it done together.
- You divide this amount into different parts. That is, you get 5 FDs done for it.
- Now the maturity period of these five FDs will also be different.
- Now you fix them according to the maturity period of one, two, three, four and five years.
- Now if you invest in this way, you will have enough liquidity.
- This technique is called ‘Fix Deposit Laddering’. Now that they have different maturity periods, then you can also withdraw it according to your own.
- The best thing is, you can remove it and fix it again.
- Before this rule, after the maturity of the first FD, the second FD will mature after two years.
- It can then be fixed for the next five years.
- If you invest in this way, you will always have cash with you.
Better option for retired people
Fixed deposit laddering technique is very effective for retired people. With this, they get regular income, and they do not face any problem of cash. If you want to have liquidity, then you can use this technique to choose FDs of different maturities which will mature in different tenors.
You also have many options in this technique. After the maturity of the first FD, if you feel that more profit than this is in some other investment, then you can invest your money there as well. That is, you will not need to be confined in a bondage. With this, your money will not be blocked at one place for many years. Therefore, the technique of FD laddering can prove to be the best for you.
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