Why you should opt for a recurring deposit for your child today?

In today’s day and age, the financial requirements and expenditures have considerably increased. Not only would you need to consider how to minimize excessive expenditures, you will also need to create the ideal investment plan for your future.

While every individual may have fixed expenditures, these are no different for parents of young children. No doubt, as these children grow older, so would the expenses increase. This can include educational expenses, health expenses and insurance covers amongst many others. However, there will be a time, wherein these expenditures can become unaffordable. At such a stage, would you really want to compromise on crucial financial proceedings in order to compensate for this expenditures?

While that may seem like an ideal option, there are alternate means to satisfy the required financial requirement. In order to do so, one must start saving right from the beginning itself. This can be achieved through a recurring deposit. Through this termed deposit, a small amount of your income will be invested in another account for a fixed termed. This sum can come from your disposable income, especially after you have satisfied all your other financial requirements. Depending on the amount that is invested, you can also earn interest on the investment. So how can you use this account to invest for your child’s future? Here is how it can be done:

Fixed monthly investment:

With a recurring deposit, you will need to invest a fixed amount every month. This is as similar as paying off an EMI. For those who have a large disposable income, this is an ideal investment strategy. Not only do you reduce the chances of unnecessary expenditure, but you also earn an interest on the amount that you have invested. Once you begin inculcating the habit of saving funds on a monthly basis, you can extend these savings for a longer period of time, say, for example, 10 years or more. When the time is right, you can use the funds of the account, for any of your child’s expenses.

Fixed duration:

Most recurring deposits come with a fixed tenure. This can be a minimum of 6 months or even 10 years. In this way, you can plan your child or children’s future, with a fixed tenure. Say, for example, you can start an investment strategy right from birth until 4 years so that there are sufficient funds for the initial educational years. Additionally, you can open a compounding recurring deposit, in order to optimize your investment with minimum effort.

Fixed rate of interest:

Normally, the rate of interest in a recurring deposit is fixed. It remains the same for the entire duration of the recurring deposit. Although the interest rate may differ from bank to bank, you can always opt for the option that offers you the best returns over a long tenure.


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