A recurring deposit is a very popular form of investing, especially among young investors. Before we get to what benefits it provides, let’s understand what a recurring deposit is.

As you can understand from the name, a recurring deposit is a financial deposit that recurs or occurs repeatedly. A recurring deposit is a type of term deposit that allows an investor to deposit a fixed amount of money every month in to their recurring deposit account. In exchange of the money parked with the bank, the bank will pay you certain interest.

Like a fixed deposit, a recurring deposit comes with its maturity date. The minimum period for investing in a recurring deposit is six months and the maximum is 10 years.

A few benefits of investing in an RD are:

It’s a safe investment:

A recurring deposit carries minimal or no risk at all. This is because in a recurring deposit, you merely lend your money to the bank for some time and the bank pays back the interest earned on it in the form of your maturity benefit. Once you start a recurring deposit with any reputed and trusted bank, you can be assured of your money being safe.

Saving + investing:

From the day you start your recurring deposit, your deposit amount starts earning an interest. With time, this amount will get bigger as you continue to invest money in it. It is advised that you stay invested for a longer duration of time so that you can earn more interest.

Maturity amount:

Once your recurring deposit tenure completes, you will receive a lump sum payout that will include your monthly/quarterly contributions as well as the interest you earned on it. You can then decide whether you want to use it or reinvest the entire amount again.

Online account:

One of the best features of opening a recurring deposit account is that it can be done at the click of a button. You only have to log in to your bank’s net banking account, select the RD amount, the tenure and you can open your recurring deposit account in a manner of minutes.