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How To Build Up Your Savings With Ease?
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In today’s times it is crucial for all individuals to have a considerable amount of savings in their accounts. This money can be used during emergencies such as accidents, etc. One of the best ways to improve your savings is by opting for fixed deposits. Fixed deposits are an ideal investment option which allows you to build up your savings. The reason being that most of the fixed deposits offered by financial institutions offer high interest rates and low risk. The main types of fixed deposits available are special fixed deposits, recurring fixed deposits and tax saving fixed deposits. Of all the fixed deposits offered, recurring deposits are the type of investment once must opt for if the aim is to improve their savings.
Recurring deposits are a type of fixed deposit which is offered by the financial institutions which require the individual to deposit a fixed amount each month. This type of fixed deposit has a high interest rate with the perfect opportunity to build up savings. Unlike other fixed deposits in which an individual deposits a fixed amount for tenure, in a recurring deposit, the deposit of a fixed amount is made every month for the tenure selected. The interest rate offered is compounded on a quarterly basis.
The minimum period offered by financial institutions is 6 months with the longest being 10 years. Another benefit of opting for a recurring deposit is that the individual is not required each month to deposit the decided amount. Many financial institutions allow individuals the option where in each month the decided amount is deposited into the recurring deposit directly from the individual’s account.
In cases where the individual is however not able to deposit the required amount the interest rate offered reduces. This hence means that at the maturity period, the individual will not get the decided amount. The interest is deducted by the financial institution as penalty. Earlier the interest earned on recurring deposits no TDS was charged. From june 2015 however, TDS will be charged on interest if it exceeds ten thousand in a financial year.
Another major benefit of opting for a recurring deposit is the fact that financial institutions allow individuals to take loans on the deposit. The deposit is used as collateral while the financial institution offers up to 80 to 90 percent of the deposit value. Recurring deposits have a number of major benefits for investors besides simply improving one’s savings.
Author Bio :
An experienced writer on finance topics, the author articulates of investment choices such as fixed deposit products in India & recurring deposit schemes. She writes about a variety of topics including the benefits of recurring deposits & fixed deposits and how to make the right investment choice.
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