Recurring Deposit is a most common type of investment where you can make regular monthly savings and earn interest. In RD, you are investing a sum of fixed amount on monthly basis for a certain period. At the end of the period, your investments will be return back to you along with the accumulated interest amount. All Commercial banks and Post office in India are offering Recurring Deposit scheme for their customers.
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What are the minimum and maximum period of RD?
Recurring Deposit is a monthly invest plan in which you can invest for minimum period of 6 months and maximum period of 10 years. If you want to invest for your minor (age<18 years) son/daughter, you can invest in RD for a maximum period of 20 Years.
What is the Rate of Interest in RD?
Rate of Interest of RD is fixed for the whole investing period. ROI will not be changed in the middle of RD. You will get guaranteed amount at the time of maturity as per the agreed ROI without fearing about the market fluctuations.
What is the Minimum& Maximum investment amount in RD?
The minimum investment amount in RD is Rs. 100/- per month and there is no limit for maximum investment.
Whether TDS is applicable for RD?
Yes, similar to other investment instruments, Recurring Deposit schemes also attract taxes. A TDS of 10% is deducted on the interest accrued from a RD, if the total interest exceeds Rs.10,000 in a single financial year.
Benefits of Recurring Deposit
- You can earn interest for your monthly investment
- You can take up to 75-90% loans on your RD amount
- Premature withdrawals are allowed under RD. However, it may come with a small penalty for premature.
- Further, Senior citizen investor gets higher rate of interest. Usually, 0.5% higher than the nominal rate of interest.
- Minors can also invest in RD accounts under the supervision and guardianship of their parents
- The tenure is also flexible and you can choose from 6 months to 10 years depending on your convenience
- RD schemes allow you to save money on a regular basis and the minimum deposit amount can be as low as Rs. 100.
Make Small Investments Periodically for Bigger Returns