While you would be earning a decent monthly income, you desire more. In that case, look for various means to generate additional passive income. This income can boost your primary income, letting you do things you have always desired. The passive income can become a primary income source as you retire, allowing you to live your life without being dependent on anyone or financially struggling.

Investing is the most viable way of creating a passive income source. Recurring Deposits are an old-school investment option that never fails. You need to make regular deposits for a tenure in the Recurring Account. You earn a competitive interest rate on your deposits. This interest-earning can function as a passive income. Hence, you can consider investing in an RD.

How to invest in an RD?

• Choose an RD scheme: There are five types of RD schemes: Regular, Minor, Senior Citizen, Tax-Saving, and NRI. Each scheme has different eligibility criteria. Consider your eligibility to invest in a suitable scheme.

• Choose a bank: You can invest in RD with any leading bank. Every bank offers different Recurring Deposit interest rates. Compare all interest rates and invest with one offering the highest interest rate.

• Select deposit amount: Banks let you invest from Rs. 500. There is no maximum investment amount, so you can choose the deposit amount. Choose an amount that fits your financial capacity and is feasible for meeting your investment goals.

• Opt for an appropriate tenure: You can invest in RD for any tenure ranging between six months to 10 years. Here again, consider your financial capacity and investment goals to determine an appropriate tenure.

How does an RD investment work?

Let’s consider an example to better understand an RD investment's workings. You plan to invest in RD to gather an amount to make a Car Loan downpayment. You invest R. 5,000 for a tenure of five years. Here is how the investment will work:

• You need to open a Recurring Account with a preferred bank.
• Since you are a normal investor, the leading bank may offer an interest rate of 7.10%.
• You decide to invest on May 20, 2024.
• You make the first deposit of Rs. 5,000 on the investment date only.
• Thereafter, you regularly deposit on the 20th of every month for the next five years.
• You can automate the RD contributions to avoid missing out on payments.
• At the end of five years, you receive the RD maturity amount.
• This amount will be approximately Rs. 3,60,615. This includes the aggregate interest amount of Rs. 60,615.
• The bank credits this maturity amount to your Bank Account, ensuring the safekeeping of your money while providing instant access to it.