Generally, Indians have a saving mentality, where they prefer to save money for their future. It is very different from the western world mentality, where people believe in a spending economy. Hence, you find people with more loans and credit cards in Western countries. However, people in India still take pride in their savings, fixed deposits, and recurring deposits. In this blog, we will learn about recurring deposits and why they qualify as the best way to save money monthly.
You Can Earn 3 to 4 Times More Than A Recurring Deposit
What are recurring deposits?
Everyone knows about savings and fixed deposits offered by banks as decent avenues for saving money. Similarly, recurring deposits also constitute one of the most exciting ways of saving money. So let us understand the modalities of the recurring deposits product.
Not every person has the luxury of opening fixed deposits in banks. Opening these accounts requires the individual to have lumpsum disposable amounts on their hands to invest. However, a salaried person usually survives on a month-to-month basis. The recurring deposits scheme presents an opportunity for individuals to save monthly and build up a decent corpus at the maturity of the deposit. Moreover, the interest rate applicable on recurring deposits is at par with the fixed deposits offered by banks.
For example, a person A decides to open a recurring deposit account with an initial deposit of Rs 10000 per month for 36 months. The scheme is such that A has to deposit the decided amount of Rs 10000 every month, which helps gradually build a corpus of Rs 360000 plus interest at maturity.
Here are the salient features of recurring deposits.
- Banks and post offices open recurring deposits in the names of individuals, singly or jointly.
- The customer is free to decide the deposit amount, which can start from Rs 10, with no ceiling on the maximum amount.
- The customer decides the deposit tenure and undertakes to deposit the pre-decided sum every month. The minimum tenure is six months, with a maximum of ten years.
- The recurring deposit account is a combination of a savings and FD account.
- Premature withdrawals and loans are available on recurring deposits.
- The interest rate is at par with the FD rates and consistently higher than the savings account interest rate.
The objective behind opening recurring deposits
The prime objective of opening recurring deposits is to encourage people to save monthly from their salaries/income to build up a corpus for their future requirements. So, if you have a surplus amount every month after catering to all your expenses, you can open a recurring deposit account. Thus, it is the best way to save money monthly.
How much should I save from my salary for the recurring deposits?
We suggest you adopt the following method to decide on your savings from salary for your recurring deposits.
- Note down your net salary after deduction of tax, PF, insurance, and other deductions like loan installments. Then, add any other regular income.
- List out your expenses and classify them as fixed and variable.
- Proceed to include the loan installments not included in your salary statement and the credit card payment estimates.
- Classify your expenses as needs and wants
- The residual amount is your savings.
- Now proceed to earmark a specific sum toward your emergency fund.
- Set aside a further sum to cover miscellaneous expenses and sudden increase in prices.
- The balance amount is what you can save from your salary. You can apportion a percentage of this amount toward your recurring deposit contribution for the month. Remember that this amount shifts to the category of fixed expenses from the following month.
Borrow More Than What You Have Saved
How to save more money to contribute towards the recurring deposits?
If I ask you ‘Paise kaise bachaye‘ (the equivalent of how to save money in Hindi), here is how you can do it.
List out the items over which you do not have any control. It includes your PF, tax, loan installments, utility bills, and all your needs, including your family’s. You cannot compromise on the emergency fund creation. So, the only item left is your wants. You can curtail your wants by cutting down on your non-essentials to help save more money for the future.
You can deposit the surplus amount in recurring deposits and watch your money grow, similar to an FD account. Thus, recurring deposits are one of the best ways to save money monthly.
Recurring deposit ka arth hai regularly paisa jama karana. Yeh bank aur post offices dvaara pradaan kee jaane vaalee ek seva hai jahaan log apni saving par achchha return kama sakate hain. chhotee monthly bachat se user maturity par achi khasi raashi jama kar sakata hai. Customer jama raashi khud decide kar sakta hai, jo minimum Rs 10 se bhi start ho sakti hai.
Yes, customer recurring deposit ko end karana sambhav hai. bank ya post office mana nahin kar sakte hai. kyonki aap recurring deposit ko usakee avadhi samaapt karane kee anumati nahin de rahe hain, bank/post office ko us interest ko rakhne/cancel karne ka adhikaar hai.
Har koi apni salary ka ek bada portion save karna chahta hai. aap paise kaise bachaye- Ye kuch golden rules:
- Monthly budget banaye
- Fizool kharche se bachey
- Pehle saving kare pfir kharch kare
- Vastuyon ke alternative dhunde
- Online shopping se door rahe
aap surplus amount ko recurring deposit mein jama kar sakate jo monthly paise bachaane ke best tareeka hai.