Recurring Deposit (RD)
Monthly savings with fixed returns.
What does it mean? (Simple)
A Recurring Deposit is like a FD, but instead of depositing a lump sum, you deposit a fixed amount every month. It's great for building a savings habit.
At the end of the period (usually 6 months to 10 years), you get back all your deposits plus interest. The interest rate is similar to FD rates.
RDs are perfect if you want to save ₹5,000 or ₹10,000 every month towards a goal like a vacation or buying something expensive.
Example with ₹ numbers
You save ₹5,000/month in a 2-year RD at 6.5% interest. After 2 years, you get approximately ₹1,30,000 (your ₹1,20,000 deposits + interest).
Common mistakes to avoid
- ⚠️Missing monthly payments (some banks charge penalty)
- ⚠️Not setting up auto-debit for convenience
Related terms
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⚠️ Educational only: This explanation is for learning purposes. Please consult a financial advisor for personalized advice.