highlights
With the ladder strategy, more interest can be earned than investing money in FD.
The lack of liquidity must also be reduced.
The ladder strategy also works to profit from increases in interest rates.
New Delhi. Attributes such as decent returns, negligible risk, and easy access to money when needed have made fixed-term deposits the top choice for risk-averse investors. Now, after the Reserve Bank of India repo rate hike (RBI Rapo Rate Hike), banks have also hiked interest rates on bank FDs. This has made interest in FD more attractive. You may be surprised to learn that some smart investors have always earned more interest than FD. It’s not like the bank gave them a separate facility. They just changed the way of investing in FD. They invest money in FD by adopting the FD ladder strategy and not in the usual way.
By investing money in FD with ladder strategy, one can not only get more interest, but also face less liquidity. There is usually no need to break the FD when money is needed. If this is required, the pre-matched payout does not incur as much loss as the FD done 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 rates and liquidity doesn’t require much multiplication. His fund is clear. Distribute the amount you want to invest in FD. Instead of investing all your money in a fixed deposit of the same maturity, split that money into three parts. Then invest it equally in 1-year, 3-year and 5-year time deposits. This is how you make a ladder out of FD. Once the 1 year FD matures, put it back into a 3 year FD. Similarly, as the FD matures, keep moving forward.
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will get more
Doing FD this way will give you the most benefit as you will get more interest. In general banks give more interest on FD of 3 years. You earn interest on your money in three ways, more than the interest you earn from a period’s cumulative investment in FD.
Money will keep coming in hand
The biggest disadvantage of long-term commitment is that there is a lack of money in our hands. Many people have to cancel their FD when money is suddenly needed. But if we have money invested in FDs with multiple maturities, then one or the other of our FDs will continue to mature at short intervals. For this reason, even in times of need, there will be no shortage of money.
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Small loss if paid out early
We have 3 FDs when investing with the ladder strategy. If we suddenly need money, we can get out of any FD in between. Since our entire balance is divided into three parts, we only lose part of our balance if we withdraw early. Not on the other two parts.
Can take advantage of the rate hike
Since the Reserve Bank of India started raising the repo rate, FD rates have also skyrocketed. Banks only grant the benefit of increased interest rates after extending the FD or after receiving a new FD. Not on old FD. When we complete FD with ladder strategy, one of our FDs will mature in less time. If we invest the same money in a new FD, we will benefit from the increased rate.
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Tags: Bank FD, Business news in hindi, FD prices, Money making tips, personal finance
FIRST RELEASED : February 13, 2023 at 2:15 p.m. IST
