Want to meet your short-term financial goals? Why not start investing in something that yields you money with interest in a safer and more secure manner? We are talking about none other than the multifarious benefits of recurring deposit or rd.

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So, what is a Recurring Deposit?

A recurring deposit is a form of investment on a monthly basis where you pay a certain pre-fixed amount of money every month and when the tenure of the term deposit ends, you get paid the principal amount along with the prevailing rate of interest back.

An RD provides a lot more flexibility in comparison to a fixed deposit as it allows you to deposit money a very less amount of money rather than a lumpsum payment. But it should also be known that there is no weekly or quarterly basis of payment in an RD.

But before you sit with your rd calculator to start investing, let us give you 6 smart reasons why you should invest through a Recurring Deposit:

  • The minimum tenure for opening a Recurring Deposit is 6-120 months in some banks with a few exceptions in other banks for 1 year (for NRIs). But you should also know that withdrawing your money prematurely may result in some penalty and also that you cannot withdraw money partially. You have to withdraw the full amount that has been saved so far.
  • When it comes to the pre-fixed amount of the monthly deposit, rest assured, if you are opening an RD in a government affiliated bank then the money can be as less as Rs. 100 or in multiples o 10. But private banks have a minimum value of Rs. 1000 and maximum of Rs. 14,99,900.
  • Make no mistake; only post office Recurring deposits are free of any sort of taxation. If your interest on an RD exceeds Rs. 10,000, then TDS is payable in any other bank.
  • The rate of interest is always higher than any other savings scheme as it is similar to that of an FD. The rd interest calculator can be given through the following formula:

I= {{P*n (n+1)r}/{12*2*100}}}

(In which – ‘I’ is the interest rate to be calculated, ‘n’ is the number of months, ‘r’ is the rate of interest per annum and ‘P’ is the principal amount.)

  • One of the biggest perks of owning and RD is that you can take a loan from it by using the deposit as collateral. Almost 80-90% of the deposit money can be borrowed from the bank as a loan by the account holder.
  • Senior citizens or people aged above the age of 60 years are eligible to receive an additional benefit from RDs in the form of an extra interest rate varying between 0.25-

0.75%.

Who are eligible for opening RDs?

Mostly for those who are risk averters or want to make safe and secure investment, RD is the best option available.

So, if you want to make a smart investment choice, choose RDs. Sign up with Kotak Mahindra Bank today and introduce yourself to smart millennial living!

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Recurring deposit is a flexible and safe way of investment on a monthly basis where a pre-fixed amount of money has to be paid, which is returned at the end of the tenure along with a fixed interest rate. Take a look at the 6 smart reasons to invest in an RD.