Recurring Deposit (RD) RD is a very popular scheme in the fixed investment scheme. Through this scheme, you can accumulate a huge fund by contributing on a monthly basis. The specialty of RD is that you can start investing in it with as little as Rs 100. Loan facility is also provided by many banks on RD.
Recurring Deposit (RD): If you are looking for an option through which a large corpus can be accumulated by contributing month after month without taking any risk, then you can opt for RD i.e. Recurring Deposit.
The specialty of RD is that in this you can deposit money every month and you get the benefit of compounding on a quarterly basis. The interest on RD is higher than the savings account. There is no danger of drowning the amount in this.
What are the benefits of getting RD done?
- You can deposit money in RD on a monthly basis.
- RD can be started with a minimum investment of Rs 100.
- Interest on RD is more than savings account and less than FD.
- Many banks also provide loan facility on RD.
- In this, a fixed amount is available on maturity.
- This also develops the discipline of investment.
Interest rate on RD
- HDFC Bank – 6.60 percent
- ICICI Bank – 6.70 percent
- Kotak Bank – 7.10 percent
- IDFC First Bank -7.50 percent
- IndusInd Bank – 7.75 percent
- SBI Bank -5.75 percent
- Post Office -6.5 percent
- (Note these interest rates have been taken from the websites of banks and post offices.)
How can I deposit a bigger fund than RD?
For example you have opened 5 years RD account in post office. 10,000 and its maturity period is 5 years. Let us assume that the interest rate on RD will remain at 6.5 percent for the coming five years, then you will be able to deposit Rs 7,09,902 in 5 years and this includes principal of Rs 6,00,000 and interest of Rs 1,09,902.
