Recurring deposit, a financial product present in almost every banks to invest your money for a specific time period and make a saving. While we may all have recurring deposits in banks, what we didn’t know is recurring deposits alone can make us rich. Without taking any risk or investing in any mutual fund or stock market, simply by opening a recurring deposit you too can become a millionaire.
How recurring deposits make us a millionaire?
We may all have recurring deposits in banks, but if used judiciously in the right manner, becoming rich is simple. One of the main advantages of this kind of deposit is that it is accessible to all at any point of time with a cheque book, ATM card and the like. But it is important that we do not touch this money and keep it safe in the bank. A simple deposit of even Rs.100 when made to recurring deposit every month will earn us interest for a period of one year. But we need to know how to take this saving of recurring deposit to the next level.
Compound interest
If you are investing Rs 100 in the bank as deposit for an interest rate of 9% for a year, then you will earn Rs.109. Next year, the interest rate of 9% will be for Rs 109 and not Rs100 thus increasing your return on investment. This interest is called compound interest. Hence the amount you invested plus the interest rate which gets reinvested every year benefits through compounding.
How you can become a millionaire?
- Saving Rs. 1600 a month –know that saving Rs.1600 a month and investing it in the bank recurring deposit for an interest rate of 8% or 8.5% for a time period of 20 years will earn you 10 lakhs and more.
- Saving Rs. 16,000 a month - If you are investing Rs.16,000 every month at an interest rate of 8.5% for a tenure of 20 years, you will be eligible to an amount worth 1 crore. Absolutely no risk or tensions just pay 16,000/- to the bank every month and make an investment of a lifetime, once it reaches maturity.
- More money to invest – If you have more money and time to invest in the bank as recurring deposit then know that capitalizing on Rs. 53,500 for 10 years can make you a millionaire at 8.5% rate of interest, Rs. 28,000 for 15 years can make you a millionaire for 8.5% interest rate and Rs.9,800 for 25 years can make you a millionaire at the same interest rate. And even if you do not have so much money to invest then just paying Rs.6100 every month for 30 years at 8.5% interest rate can make you a millionaire.
Hence investing early in recurring deposit even for a small amount for a long time, can make you a millionaire, provided you only withdraw upon maturity.
