Navigating the Recurring Deposit Market: How to Get Better Returns on RD

Saving money and building a corpus for the future is a goal many of us strive for. One way to achieve this is through opening a Recurring Deposit (RD) account. RDs not only help inculcate disciplined saving habits but also offer attractive interest rates, making them an ideal investment option. 

In this article, we will guide you on how to navigate recurring deposit market for maximum benefits. 

Understanding the Recurring Deposit Landscape 

RDs are savings instruments where you deposit a fixed amount every month for a set tenure, earning guaranteed interest. Unlike Fixed Deposits (FDs) where you invest a lump sum, RDs allow you to save gradually in small monthly instalments. 

Why are RDs Popular? 

• Inculcate regular savings habit
• Earn higher interest than savings accounts
• Provide guaranteed returns, no market risk
• Offer flexible tenures from 6 months to 10 years
• Help save for short to medium-term goals 

Navigating the Recurring Deposit Market: Step by Step 

In order to navigate recurring deposit market effectively and find the best RD choices, it's important to follow these steps: 

Step 1: Determine Your Financial Goals 

Before you start comparing RD options, it's essential to have a clear understanding of your financial goals. Are you saving for a down payment on a house, a child's education, or a dream vacation? Knowing your goals will help you determine the tenure and investment amount necessary to achieve them. 

Step 2: Conduct Market Analysis 

To make informed decisions about your RD investments, it's crucial to analyse the market. Research different banks offering RD accounts, compare their interest rates, tenures, and additional features. 

Look for reliable sources such as financial publications and trusted websites to gather accurate information. 

Step 3: Calculate Your Potential Returns 

In order to make an informed decision about which RD option is best for you, it's important to calculate the potential returns. By using a recurring deposit calculator, you can input the investment amount, tenure, and interest rate to determine the maturity amount. This will give you a clear idea of the returns you can expect. 

Let's consider an example: 

You want to invest ₹5,000 per month for a tenure of 3 years. Bank A offers an interest rate of 8.5% on their RDs. Using a recurring deposit calculator, you can calculate your potential returns: 

Monthly Investment: ₹5,000 

Tenure: 3 years 

Interest Rate: 8.5% 

Based on these inputs, the recurring deposit calculator shows that at the end of 3 years, your maturity amount would be ₹1,98,500. 

Disclaimer: The calculation above is for illustration purposes only. Ujjivan SFB does not claim any responsibility for the accuracy of the information. For latest RD rates, kindly click here.
 

Step 4: Consider Additional Features 

While interest rates and tenures are important factors to consider when choosing an RD account, it's also worth looking into any additional features offered by different banks. 

Some banks may provide flexible options like premature withdrawal or loan against RD, which can be beneficial in certain situations. 

Step 5: Make Your Decision 

After conducting market analysis, calculating potential returns, and considering additional features, you're ready to make your decision. Choose the RD account that aligns with your financial goals and offers the best overall benefits. 

Remember to read the terms and conditions carefully before finalising your investment.