Dreaming of becoming rich with little money or small income can be difficult as people are not aware of the smart financial planning formula. For building assets with low income, one must start planning early in life to reap the benefits. Just investing your money here and there is not enough to reach your goal. In order to fulfill our financial goals, one must be ready to take a longer route by investing on monthly basis for your money to grow faster. Therefore, one must avail the Recurring Deposits.
Recurring Deposits/RD – Definition:
By Recurring Deposit or RD is a unique term deposit which is offered by the banks. It is a great investment tool which allows those to make regular deposits that earn decent returns on their investments. Each month a fixed amount is invested by the account holders in the bank. Additionally, the account holder also earns an interest (at a predefined rate) on that fixed amount. The recurring deposits are one of the popular investment options that you should explore to succeed in your financial path. All the major banks in India offer a recurring deposit with a term usually ranging between 6 months and 10 years, providing individuals the power to choose their term depending on their needs and requirements.
For example, an individual saves Rs. 1,000 every month and has invested this money in the recurring deposit for a year. On this amount, the individual will earn the interest that is equal to the bank’s FD interest rates.
Why open a Recurring Deposit Account?
First and foremost, the recurring deposit is simple to open and there is no hassle to monitor it as the bank keeps a check on the deposits till it matures. Moreover, the biggest advantage is that you can save a lot every month. It becomes like a forced investment, since the amount is automatically transferred from your bank account. A very important feature of this product is that a recurring deposit account can be opened for as low as Rs. 100 with public sector banks and Rs. 500 with private sector banks. If compared with Fixed Deposit, the recurring deposit works best for individuals who are investing small amounts but are earning the same rate of interest as fixed deposit account holders.
How does Recurring Deposit help you get rich?
For long term benefits, an individual can invest in a recurring deposit and after the completion of his term can use the accumulated funds to buy assets. A smart investor will always buy assets and not liabilities from his/her investment linked savings. By liabilities we mean buying cars, house etc. which increases your expenditure. As a golden rule, always buy assets from your recurring deposits in order to become rich. Choose a recurring deposit which offers higher interest rates so that you can reach your financial goals much faster.
The amount of money you earn from your daily job is not the main problem. The main problem is the approach to making more money. The best possible way to make more money is by opting for a recurring deposit which gradually opens up a lot of avenues for you earn good returns as well as getting closer to your objective of getting rich.
