How to make the most out of your Recurring Deposit Account
Are you looking for the best financial investment? It’s about time you start to consider recurring deposit as a high yielding asset and one of the most rewarding investment decisions. A recurring deposit is basically an investment tool which allows you to make regular deposits and earn good returns on the same. All you have to do is open a recurring deposit account for a fixed amount, tenure and interest rate. However, it is important to know how to invest in a way that you can get the most out of it. Here is a list of four ways to ensure the highest returns from your Recurring Deposit account.
1. Select the Right Bank
The first and the most important step is to understand which bank you want to go for. You can figure this out by understanding the interest policies and the rate of interest the banks provide on your recurring deposit account. The interest rates vary from bank to bank. Start with searching for banks that provide the most competitive interest rate on RD. An average rate fluctuates anywhere between 6-7%.
2. Decide the Tenure
The tenure will again depend upon your preferred banking partner. Usually, the time period is between 1 to 10 years. There are various online calculators available for you to systematically plan for your return on investment. Choosing the tenure and the amount would be critical to get the returns that you expect.
3. Be Calculative with the Amount you Sign Up for
Remember that the amount of money you decide to deposit will have to be invested at a regular interval for a prolonged period of time. One might think that investing more money will fetch them higher interests; but often forget to look at the other side of the coin. Your cash flow will be highly affected. So, the bottom line is to take the decision with a calculative and a realistic mind.
4. Lock the money
It is very easy to redeem the money from a recurring account. Therefore, ensure that you lock certain amount of money to get the best out of an RD. Premature withdrawal of funds might come with a penalty and you might not be able to get returns as per your calculations.
While you calculate your expected returns, do not forget to account for the tax as the interest earned on RD is not exempted from tax.