Finance

What Are the Advantages of Recurring Deposit?

Written by ArjitChalmela

Recurring Deposit is among India’s most preferred investment schemes. The RDs are an improved variant of the fixed deposit, intended to save any amount over some time. Risk-averse investors in pursuit of a promising investment scheme with good returns prefer Recurring Deposit because it is easy and a straightforward finance product.

<strong>How does it work?</strong>

In a recurring deposit scheme, each month the investor deposits a fixed sum over a predefined period that usually ranges from one year to five years. The recurring deposit scheme has one significant differentiating factor as compared with the fixed deposits-the investor has to deposit a lump sum at one go in a fixed deposit scheme and leave it for some time. So, usually, people who don’t have a lump sum or people who want to invest a fixed amount every month prefer Recurring Deposits. At the end of tenure, the principal amount deposited is returned along with interest.

<strong>Advantages of recurring deposit</strong>
<ul>
<li>Short-term goals: Investing in a recurring deposit is risk-free and yields assured returns. If you have short-term investment goals, investing in Mutual Funds and Stocks may not be a safe choice. Due to this feature of RD, investors planning on short term goals in a period of one to three years choose to save and invest in Recurring Deposit. <a href=”https://www.hdfcbank.com/personal/save/deposits/recurring-deposit”><strong>Recurring deposit</strong></a> may just be the right financial product if you intend to deal with short-term goals that need financial support.</li>
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<ul>
<li>Simple documentation: It is not difficult to arrange the documentation needed to open a recurring deposit account. All customers can open a recurring deposit with a savings account linked to it. No further documentation will be required once the savings account is opened. It is the easiest way to save money and with a promise to build wealth.</li>
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<li>Online facility: With almost all banks offering online Recurring Deposit features, it has just become easier to invest. The customer can deposit money in close the RD account, open another <a href=”https://www.hdfcbank.com/personal/save/deposits/recurring-deposit”><strong>RD</strong></a>, Recurring Deposit account, update information, view transactions, deposit, and do more.</li>
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<li>Brings in the discipline: The investor has to deposit a fixed amount each month in a recurring deposit scheme which will build up a savings discipline. RD plans come with guaranteed returns and the rate of interest for RD is fixed, which will protect the investor from fluctuations in interest rates.</li>
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ArjitChalmela

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