Planning for your child’s future is one of the most significant responsibilities you can undertake as a parent. From education to unforeseen expenses, financial security is essential to provide the best opportunities for your child. One of the most reliable and straightforward ways to ensure a secure financial future is to invest in a Recurring Deposit (RD) for your child.
Understanding Recurring Deposits
A Recurring Deposit allows you to deposit a fixed amount of money every month, which earns interest over a predetermined period. It is a secure and disciplined investment option, ideal for those who want to save regularly and grow their wealth steadily. The money you deposit in an RD grows at a fixed interest rate, providing you with guaranteed returns at the end of the term.
Why invest in an RD for your child?
- Disciplined savings: An RD encourages regular savings, ensuring you consistently set aside money for your child's future. It eliminates the need to invest a large sum upfront.
- Guaranteed returns: The interest rate is predetermined, so you know exactly how much your investment will grow, providing a sense of security.
- Flexible tenure: You can choose an RD tenure that aligns with your financial goals, whether it’s saving for your child’s higher education or building a nest egg for their future.
- Liquidity: While RDs have a fixed tenure, you have the option to close the RD in case of an emergency prematurely. However, there might be penalties for early withdrawal.
Investing in an RD in the name of a minor child
One of the most strategic ways to save for your child’s future is by opening an RD Account in their name. When you invest in an RD in the name of your minor child, you create a financial asset that will be available to them once they reach maturity, or at a crucial stage in their life.
Here is some crucial information for the same -
- Eligibility: Parents or legal guardians can open an RD Account in the name of a minor child. Typically, the age limit for the minor is 18 years. The account is managed by the parent or guardian until the child attains maturity.
- Documentation: To open an RD in a minor’s name, you will need to submit a few documents, including the minor’s birth certificate, a photograph of the minor, and identification and address proof of the parent or guardian.
- Tenure and deposit amount: Choose the tenure and the monthly deposit amount based on your financial goals. The tenure can range from a minimum of 6 months to a maximum of 10 years, depending on the bank.
- Interest rates: Banks generally offer the same interest rates on RDs for minors as they do for adults. The interest is compounded quarterly, ensuring that your savings grow steadily over time.
- Maturity and withdrawal: Upon maturity, the RD amount can either be transferred to the child’s Savings Account or reinvested in another financial product, depending on the needs at that time.
Also Read: How to open an RD account online? - Step-by-step guide
Conclusion
Investing in an RD for your child not only secures their financial future but also offers you the flexibility to save regularly with a minimum investment of just ₹500. With Axis Bank’s Recurring Deposit, you can enjoy flexible tenures, higher interest rates based on your instalments and Axis eDGE Rewards, making it an ideal choice to build a substantial fund for your child’s future needs.
Start planning today to ensure your child has the financial support they need for tomorrow.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
