MUMBAI :
Mumbai: The recurring deposit (RD) is taken into account as step one in direction of financial savings. It builds up a behavior of placing away a sure amount of cash each month to construct up a small corpus. Traditional RDs may also be limiting—a person can solely make investments a certain quantity every month.
If you’ve gotten some extra funds or in the event you needed to enhance your month-to-month deposits, it is not attainable in a conventional RD. But banks now have a versatile RD various that enables a person to deposit extra quantities as and when obtainable.
The flexi RD has all the advantages of recurring deposits and, on the identical time, supplies extra comfort and adaptability. “They offer the same returns as regular RDs, but give you the flexibility of augmenting your investment whenever you have the funds. This can help you build a much bigger corpus over time,” stated Adhil Shetty, CEO, Bankbazaar.
To spotlight the advantages of versatile RDs, Shetty offers an instance. Several banks supply long-term tax-free RDs. When you begin investing, you could have been capable of make investments solely a specific amount, however say, a few years down the road, you could have extra funds at your disposal, and you may enhance the cash you set away each month.
The flexi RD comes with two elements—one mounted and one variable. The mounted part is the precise quantity you commit each month, whereas the variable part can change.
Opening the flexi RD is much like the common RD. “Once you open the flexi RD, you can invest the variable amount in specified multiples. Note that the bank will set a cap on the amount that can be invested in one month or financial year,” stated Shetty.
The curiosity on the mounted quantity is as per relevant charges. In most instances, the mounted quantity have to be deposited on the pre-determined date. Else, the financial institution will levy a penalty. The versatile quantity may be invested at any time of the month, and no penalty will probably be levied.
Some banks may permit pre-closed flexi RD schemes at any time with none untimely closure costs although not all banks permit it. “It is important to remember that different banks have different criteria around how much additional deposit you can make in one year, the tenor of the RD, and pre-closure,” stated Shetty. So be sure to perceive these very clearly earlier than you make investments.
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