Investing a diversified savings instrument will help you to build a retirement corpus while mitigating the risk. Choosing a few secure investment instruments for your portfolio will not only ensure the safety of the capital but will also help you to achieve your financial goals with ease. Building a retirement corpus needs meticulous planning and investment in the right financial instruments. For many investors Recurring Deposit (RD) has become a preferred choice as it offers higher return and comes with low-risk. Senior citizens can also look forward to investing in this instrument as many banks offer higher interest rates on RDs compared to traditional savings.

What is a Recurring Deposit?

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Commonly referred to as RDs, Recurring Deposits allow investors to regularly deposit small amounts and yield satisfactory returns after a fixed period. Besides being a low-risk option, RDs also offer moderate returns and flexibility to investors, allowing them to select their preferred investment amount and tenure. Long-term RDs can be considered a good option for senior citizens who want low-risk investments for a longer term with guaranteed returns. Many banks are offering up to 8.5 per cent interest rate on recurring deposits for senior citizens.

Benefits of long-term recurring deposit for senior citizens

Here are some of the benefits that senior citizens get with recurring deposits:

Regular savings: As RDs require investments on a monthly basis, it encourages a habit of regular and disciplined savings. You can build your wealth in the long-term by depositing small amounts every month in RD accounts.

Interest rates: In comparison to normal savings accounts or short-term RDs, investors can earn better interest on long-term recurring deposits. The longer one keeps their funds, the higher the interest rate.

Fixed returns: Based on the interest rate and certainty, returns on RDs are predictable and thus one can calculate the returns that will be received upon maturity. It is not much affected by market fluctuations and helps to decide the investment amount as per your financial goal.

Lesser risks: Unlike other investment options, RDs are not subject to market risks or volatility, thus making them a good low-risk investment option that can ensure a stable and secure instrument for senior citizens.

Safer option: Backed by the Deposit Insurance and Credit Guarantee Corporation (DICGC), RDs are secured for up to Rs 5 lakh per depositor per bank. This makes RDs a safer option compared to other instruments.

Given the mentioned benefits of investing in long-term recurring deposits, one can research the interest rates provided by banks and make a choice based on their requirement.