With the ladder strategy, more interest can be taken than investing money in FD.
The lack of liquidity also has to be reduced.
Ladder strategy also works to take advantage of the rise in interest rates.
New Delhi. Features like decent returns, negligible risk and easy access to money when needed have made Fixed Deposits the first choice for risk-averse investors. Now, after increasing the Reserve Bank of India’s Repo Rate (RBI Rapo Rate Hike), banks have also increased the interest rates of bank FDs. Due to this, the interest on FD has become more attractive. You will be surprised to know that some smart investors have always been earning more interest than FD. It is not that the bank has given them any separate facility. They just changed the way of investing in FD. They invest money in FD by adopting FD ladder strategy, not in the normal way.
By investing money in FD with ladder strategy, not only can one get more interest, but also one has to face less liquidity. There is usually no need to break the FD when money is needed, if it is required then there is not as much loss on the pre-matched withdrawal as it is on the FD made in the normal way. So if you intend to have a fixed deposit, then first know the ladder strategy.
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What is Ladder Strategy?
Adopting this strategy to earn higher interest and liquidity does not require a lot of multiplication. Its fund is clear. Distribute the amount you want to invest in FD. Instead of putting all your money in a fixed deposit of the same duration, divide that money into three parts. Then invest it equally in fixed deposits of 1 year, 3 years and 5 years duration. In this way you make a ladder of FD. As soon as the FD of 1 year matures, put it again in FD of 3 years duration. Similarly, as and when the FD matures, keep moving forward.
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will get more
By getting FD done in this way, you will get the most benefit that you will get more interest. Generally, banks give more interest on FDs of 3 years. You will get interest on your money in three ways and it will be more than the interest you get from the cumulative investment made in FD of one period.
money will keep coming in hand
The biggest disadvantage of going for a long term period is that there is a shortage of money in our hands. Many people have to break their FD when there is a sudden need for money. But, if we have invested money in FDs with multiple tenures, then one or the other of our FDs will continue to mature at short intervals. Due to this, there will be no shortage of money even at the time of need.
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Low loss on premature withdrawal
We have 3 FDs when we invest using the ladder strategy. If suddenly we need money, we can withdraw from any one FD in between. Since our entire fund is invested in three parts, we lose only a part of our fund on premature withdrawal. Not on the other two parts.
Can take advantage of rate hike
Ever since the Reserve Bank of India started the process of increasing the repo rate, FD rates have also started jumping. Banks give the benefit of increased interest rates only after renewing the FD or getting a new FD. Not on old FD. If we have got FD done with ladder strategy, then one of our FDs will mature in less time. When we invest the same money in a new FD, we will get the benefit of the increased rate.
Tags: Bank FD, business news in hindi, FD Rates, Money Making Tips, personal finance
FIRST PUBLISHED : February 13, 2023, 14:15 IST