Recurring deposit is one of the famous investment tool. It is my first investment when I have started working 12 years back. Recurring Deposit means you will be saving a small amount of money every month and will continue for a time frame like 6 months, 9 months etc. Now after the maturity you will get a lumpsum amount which includes the principle and interest.
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I like RD because if my goal is a small term goal and I don't want to save all at once, I save it every month. For example, in the month of September I have two major money requirement, one for my health insurance and one for my LIC. The amount is huge and around 25% of my salary will be spent on it.
So instead of giving 25% of my salary all at once in one month, I have 2% every month through RD of one year and every August last it get matured and thus I get my money for September. In this way every month, I don't feel much problem with 2% but yeah if I have to pay 25% then it becomes a problem.
That's why I said Recurring Deposit should be used in such a way that you get the money when required and it is best for only short term goals like 1 to 3 years. For long term goal RD is not a good investment product because it cannot beat the inflation. But for short term you actually do not require to beat the inflation, you require to safeguard the capital and along with that you will get some profit on top of that.
And I don't create one RD, currently I have around 2 RDs running and I am planning to create one more for my child's education for next year. In this way I will not burn the money on one month and always be ready for the future.
