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A list of common characteristics between FD and RD

by MarketMillion
A list of common characteristics between FD and RD

Saving and investing money for the future helps you enjoy maximised returns. However, most people are risk-averse. If you are the same, you must choose the investment products safely. Banks offer plenty of solutions to grow your wealth for the same. These include Fixed and Recurring investment accounts.

A Fixed Deposit offers a fixed interest throughout the investment tenure. You make a lumpsum investment for the same. The term ranges from seven days to 10 years, which accumulates interest and is withdrawable upon maturity. You may also opt for regular interest payouts. However, this reduces the interest earned on it.

Unlike FD, you make deposits in flexible intervals in a Recurring Deposit. The interest earned monthly gets compounded every quarter. Banks today offer these deposits on their websites for convenience. You need to furnish the relevant details for verification during the account opening process. Enter the login credentials and enjoy the facilities. While this is an overview of an RD and FD, here are some commonalities between them:

  1. Expected earnings

You know the maturity amount of the RD account from the time of investment. This enables you to plan your investment strategy accordingly. Also, adjust the tenure, interest rate, and investment amount to plan your expenses by linking your financial goals. Doing this makes you prepared for your child’s education, marriage, international tours, home renovations, and other future costs.

  1. Fixed returns

Both these deposits are fixed-income investments. The Recurring and Fixed Deposit interest rates are predetermined at the beginning of the tenure and remain the same throughout the investment period. Moreover, market fluctuations do not affect them. The bank guarantees the returns upon maturity. Hence, you need not worry about getting unpredictable earnings.

  1. Withdrawals

Ideally, you should not withdraw funds from Bank Deposits before maturity. But if you want to, you get the facility of premature withdrawal. However, it attracts a penalty. Some banks let you withdraw part of the invested amount without any fees. If there are subsequent Term Deposit withdrawals, you pay a premature penalty.

  1. Loan against deposits

You get to apply for a Loan against both deposits to fulfil your expenses and purposes. Banks set varied limits on the amount you borrow. You can use the Fixed or Recurring Deposit Calculator to compute the applicable returns. You simply have to enter the monthly investment amount, tenure, and expected return rate of your deposit.

Once that is done, it displays the total investment value upon maturity within seconds. That, too, for free on any banking website or Banking app.

  1. Investment method

You open the Term Deposits by visiting the bank or through the internet and mobile banking. The latter is a convenient option that lets you complete the process quickly. You also get to choose a nominee or open the account jointly. It ensures there is someone to claim the maturity proceeds in your absence.

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