Planning a wedding comes with its share of excitement and stress. From venue bookings to outfits to decor, the expenses may add up quickly before you realise it. It is no surprise that weddings can often cost more than estimated, which is why it is important to have a good savings strategy in place.
Recurring Deposit is one such investment scheme that offers a smart and secure discipline to build funds over time with a fixed monthly contribution at a specific interest rate. It assists you in planning your dream wedding without any budget restraints. Let’s understand RD in detail and know how it successfully helps plan your wedding expenses in the long run.
What Is A Recurring Deposit Actually?
A Recurring Deposit (RD) is a popular savings option where you can invest a fixed amount at regular intervals—usually monthly—and earn interest on your savings. It is ideal for low-risk investors seeking assured returns. RDs offer flexibility in choosing the deposit amount and tenure, which typically ranges from 6 months to 10 years.
Interest rates generally fall between 5.75% and 7.50%, depending on the bank and prevailing market conditions. At the end of the tenure, you receive a lump sum comprising your principal and accumulated interest. Offered by most banks and NBFCs, RDs encourage financial discipline and are suitable for both short- and long-term savings goals.
Advantages of Recurring Deposit to Save for Weddings
For the ones looking for a reliable investment to save funds for their wedding, this is how RD makes a profitable choice:
Higher and Fixed Interest Rates:
Investment in RD accounts would mean earning higher interest. (RD interest rates are comparably higher than other savings options, allowing you to gain competitive returns on your amount.) Moreover, the rates after you have applied do not change with market volatility or the banks’ policies. You will have a fixed interest rate throughout your tenure, irrespective of fluctuating external factors.
Guaranteed Returns:
Unlike the changing investments such as mutual funds and equity, RD offers assured returns on your principal amount. If you are a salaried individual seeking a stable option, then recurring deposits come forth as a dependable choice. It makes a safe investment strategy with minimal risk factors. At the end of the tenures, you know exactly how much you will earn on your investment. This helps you budget and spread savings accordingly for your wedding investment.
Flexible Amount and Tenure:
Investors often seek freedom in choosing the amount and duration of their investment. And recurring deposits offer exactly that. Being accessible to individuals across various income levels, you can start with monthly deposits as low as ₹500. Plus, the tenure ranges from 6 months to 10 years. It gives you flexibility to align it with your financial goals.
Overdraft Facility:
RD investments come with an added perk of a bank overdraft facility. Many major banks provide an overdraft option to people against their RD account. With this facility, you can borrow money against your recurring deposits at desirable interest rates in times of emergencies.
Loans Against RD:
In case you face any financial instability while saving for the wedding, you do not have to break your RD. Banks allow customers to avail of any loan against their RD, offering access to funds during emergencies. This helps individuals to manage their short-term financial needs without disrupting their long-term savings.
Wrapping Up
Recurring Deposits (RDs) are a simple and reliable way to save for your wedding. With fixed monthly contributions and guaranteed returns, RDs encourage disciplined money management. It helps you avoid financial stress or last-minute loans. If you have 1-3 years for your great event, then it is the right time to begin investing in RD.