Best time for Bank deposits

Interest rates have been going up for some time now, but how long would they keep going up. From the way things are shaping up, it looks like they would start coming down soon. We can easily assume that the interest rates are at their peak; this would be the right time to lock your investments as good interest rates.

But what if you do not have enough funds to invest, why don’t you start a recurring deposit. Make it a long term recurring deposit. Recurring deposits are similar to SIP’s of mutual funds, in mutual funds there is a risk involved, but in case of recurring deposit, you fix the interest rate the bank would pay you. You make a fixed investment every month, which earns a fixed rate of interest.

As with any investment with a bank, recurring deposits also have a fixed tenure. At the end of the tenure, you get a lump sum, which is equal to the total amount invested, along with the interest earned on it. The best part is the minimum amount can be as small at Rs.100/-. Recurring deposits become more attractive for senior citizens.

Most banks give a higher interest rate for senior citizens. So if you are a senior citizen and you have some extra money and don’t know what to do, instead of leaving it idle in the saving bank account, open a recurring deposit account. But remember, it is like an insurance premium, a commitment, so invest only as much as you can commit over time.

Don’t default on you payment of regular deposit, as this would lead to a penalty, which is like reducing the interest rate you would get. Unlike a SIP with a mutual fund, where you could stop the SIP at any time, you cannot do it with a recurring deposit. Nor can you change the terms mid way. It’s a fixed commitment from both the bank and you.