Recurring Deposit Participation:
Recurring deposits are as old as savings for the banking customer. A recurring deposit was the most popular way of saving money regularly for a guaranteed rate of returns. Designed to save any amount over a period of time, RDs are an advanced version of the fixed deposit. This is because a recurring deposit understands that you may not be able to save all the money in one go. So, it allows you to save bit by bit, and get returns on the outstanding balance.
The main features of Recurring Deposit account are as follows:
- Recurring Deposit schemes aim to inculcate a regular habit of saving among the public.
- The rate of returns is equal to that offered for a Fixed Deposit and is hence higher than any other Savings scheme.
- Premature and mid-term withdrawals are not allowed. However, the company may allow to close the account before the maturity period, sometimes with a penalty for premature withdrawal.
- The Recurring Deposit can be funded periodically through Standing Instructions which are the instructions given by the customer to the OSHAMI to credit the Recurring Deposit account every month from his/her Primary account.
Benefits of Investing in Recurring Deposit
Investing money in a recurring deposit account is a shrewd investment as the principal amount invested is almost guaranteed to give a return. The rate of return offered on it is also attractive. All this makes the recurring deposit a smart investment option.
Some of the other benefits of investing money in a recurring deposit account are:
- A simple financial product to invest in: A recurring deposit is one of the simplest financial products in the world to invest in. The concept of investing money in it is pretty simple. For any person who is new to the world of financial investment, experts always advise the person to invest their money in a recurring deposit account. Initial investments in recurring deposit also develops good investing habits for the individual.
- Guaranteed returns: Unlike equity and mutual funds, recurring deposits offer guaranteed returns on the principal amount invested in the short term.
- Tenure and minimum amount to be deposited: The tenure of a recurring deposit account usually varies from 3 years to 7 years. The depositor can select the short-term, medium-term or long-term period for investment in a recurring deposit account. Also, the minimum amount to be deposited to open an RD account is AED 100 which is not a huge amount to deposit at the beginning.
- Anytime withdrawal: Recurring deposit accounts also offer the facility of withdrawal of the account any time after completion of 3 years.
- Flexible recurring deposits: Another advantage of investing money in a recurring deposit account is flexibility. A flexible recurring deposit is a scheme in which a person can invest any amount of money (greater than the RD start amount or the amount equal / higher than the minimum amount deposited during the RD period) at any intervals of time.
* All the payments are backed by the Office of His Highness.