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Saturday, January 24, 2015

Is this the right time to book Recurring Deposits (RDs) ?

If ever there was a right time to book Recurring Deposits (RDs), it has to be right now.

If your portfolio demands more allocation to debt based investments, or if you are trying to balance your portfolio towards debt considering that the equity portion has jumped significantly over the last 6 months causing an imbalance in your portfolio, getting into FDs / RDs is one of the choice you have.

And if ever there was a right time to book Recurring Deposits, it has to be right now. The RBI is about to cut lending interest rates, considering the controlled inflation as well as various other macro and micro economic factors in India. When banks can get money from RBI at a lower interest rate, they would obviously cut the rate at which they borrow money from you. Some banks have already started the rate cut.

This will result in banks cutting the rates of Fixed Deposits (FDs) and Recurring Deposits (RDs). So, if you plan to do some new FDs in the coming months, its better to lock down in a RD with the current rate of interests that are available.

In Recurring Deposits (RDs), once you have locked in an interest rate, it never gets changed till the duration of the Recurring Deposit is completed. Also, you tend to save on the hassles of TDS deductions vis a vis that of FDs.

For more understanding of Recurring Deposits, Vs Fixed Deposits, please click here.

So go on, lock your interest rates before they start moving towards south.


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