Recurring Deposit

Meaning :

A Recurring Deposit (RD) is defined as a savings product where a fixed amount of money is deposited every month for a specified period, earning guaranteed interest. This product promotes regular saving and is ideal for individuals who prefer making  small monthly contributions instead of larger lump sums.

Example : 

For example, depositing ₹1,000 every month in an RD for 2 years helps in  building disciplined savings over time.

How to Understand : 

Consider an RD as a structured savings plan where you "save a small amount regularly."

It encourages financial discipline because the same amount is deposited each month.

Over time, these small deposits accumulate and grow into a larger sum with interest.

Importance :

RDs are effective in building long-term savings for future goals or emergencies.

They are particularly suitable for beginners, students, and salaried individuals looking to save consistently.

RDs are low-risk options that provide fixed guaranteed returns, making them safe  investments.

They foster regular financial discipline by instilling a habit of saving.