I would like to share one of my experiences in the life. Year back I had an old motorbike. So I thought to buy a new one. For that I needed Rs. 60,000/-. But I was unable to collect that much money together. I planned to apply for a loan and approached the Bank. The procedure of the loan was very complicated because, they asked me to produce bank statements, cheques and we should pay the margin money also. So I left that plan.
Then I thought to save a particular amount every month for a year from my income. So planned to start a savings account. But the problem with the saving account is there is a possibility to withdraw money at any time. If so, our savings will not be enough for a year to buy a motorbike.
So I enquired in a bank that any other plan, which is suitable for my need. One of the bank staff introduced me about the Recurring Deposit (RD). This deposit can be start for a particular period (12 months to 120 months) with fixed monthly installment. The interest of this deposit is same to the Fixed Deposit (FD). No TDS(Tax Deducted at Source) is deducted for RD. If we are unable to continue the deposit, we can withdraw the amount, but must pay a nominal penalty for that. The main attraction of this deposit is Quarterly Interest Compounding (monthly interest is calculated on monthly balance and added to balance in every 3 months). So I started a RD for a year with a monthly installment of Rs. 5000 and the interest rate is 7.5 % per annum.
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The Table shows the comparison of Savings Bank and Recurring Deposit
for same installment amount |
Successfully I completed a year and I withdrew Rs. 62480/- with interest. Really it was apart my expectation. Now I have a new motorbike. Next I am going to start new RD for 3 years to buy a car. If you have a goal for any purpose in your life, I am sure that the RD will support you. Wish you all the best.
