Today, every individual is slowly becoming financially aware. Plenty of these individuals, especially parents are prioritizing financial planning for their whole family, especially when it comes to their children. But with so many financial options to consider, what are the best options that will not only provide the parents with the convenience to manage the funds but also the flexibility for their children to access the funds at the right time?
This is when the recurring deposit will make the ideal option. This termed deposit functions in such a manner where it allows the account holder to deposit a fixed amount of funds on a monthly basis until the tenure is met. Once the tenure is completed, the interest will be deposited along the recurring amount that has been invested. The invested amount can be anywhere as a much as Rs. 100 to Rs. 10,000 depending on the institute you are applying to. Additionally, you can even use the RD calculator to get the required amount that you would need to invest, and even the outcome that will come out of it. So how can you use this account to benefit you and your child?
• Fix a goal
As you grow older, you will notice that your financial requirements will increase over time. For one, you will need to set aside funds to run the house. Or you may also need additional funds to plan for a family event such as a birthday or a wedding. What better way to spend for such events, than by saving for it right from the begging? For such a requirement, you can open a recurring deposit for this purpose alone. Additionally, you can open several recurring accounts with different rates and tenures to match different financial goals. You can even use the RD calculatorto calculate the ideal amount and interest you would want for this purpose alone.
• Fix a tenure
Like the financial goal, you can fix the tenure of the recurring deposit. The tenure of the recurring deposit can be a minimum of 6 months to a maximum period of 10 years. Once this tenure is met, you can either reinvest the amount in another account or renew the tenure for the same or different tenure. Fixing the tenure allows you to also fix the interest rate of your investment. Longer the tenure of the period, higher will be the interest rate. Since the interest will also be deposited at the time of maturity, you can use the extra funds in the same account.
• Fix a nominee
As a part of one of the functions of this account, the account holder is allowed to select a nominee. You can open an account under your name, along with your child’s under the minor category. Once the child reaches the required major age, the account holder can transfer the account to the child’s name, or make it the primary holder of the account. This allows the child to use funds as per one’s requirement, while also allowing them to maintain the account for a long term purpose.