By Ronni Peel
Indians love risk-free investments, saving money for the future, and maximising them. You must invest smartly and choose appropriate financial products aligned with your objectives. Nowadays, banks offer plenty of avenues to grow your wealth and increase cash flow. They are also available digitally. A Fixed Deposit provides a fixed interest throughout the investment tenure.
You make a one-time investment at the beginning of the tenure ranging from seven days to 10 years. Upon maturity, you receive the principal and interest amount at fixed intervals or as a lump sum. On the other hand, when you open a Recurring Deposit, you deposit a fixed amount at regular intervals. The interest earned monthly includes the total investment amount upon maturity. It remains constant throughout the tenure of six months to 10 years.
Common features
Nowadays, banks offer these deposits on their Banking apps for convenience and to save time. You must enrol for the service during the account opening process and submit the relevant details for verification. Enter the login credentials and enjoy the facilities. The following are some features both deposits possess:
Known returns
You know the maturity amount of the RD Account from the time of investment. The tenure, interest rate, and investment amount allow you to plan your expenses by linking your financial goals. You remain prepared for your child’s education, marriage, international tours, home renovations, and other future costs.
Fixed income investments
Both these deposits are fixed-income investments. The Recurring and Fixed Deposit interest rates are pre-determined at the beginning of the tenure and remain the same throughout the investment period. Moreover, the market fluctuations do not affect them. The bank guarantees the returns or maturity proceeds of both investment options.
Premature withdrawal
It is allowed for certain types of deposit accounts by paying the penalty. Some banks allow you to withdraw part of the invested amount without penalty. In the case of subsequent withdrawals from the FD, you pay a premature penalty.
Mode of investment
Now, conduct all your banking activities without hassles. You open the FD Account by accessing the internet and mobile banking platforms. They are an ideal gifting option for your family members to make them financially independent.
Loan facilities
You avail of Loans against both deposits to fulfil your expenses and purposes with varied limits. Use the Recurring Deposit calculator to calculate the approximate returns applicable by entering the monthly investment amount, tenure, and expected return rate.
Tax deduction
Banks deduct TDS from Fixed Deposits from the interest income if it exceeds Rs. 10,000 in a financial year, whereas there is no TDS deduction in the Recurring Deposits.
