Okay. Here we go.
Think of it as a piggy bank but on a small dosage of steroids. Like a bulky little piglet walking around a farm. That’s your deposit.
The reason it’s just a small dosage of steroids is because the interest rate the banks are providing for deposits are quite low these days. Gone are the days when we could open a ‘Fixed Deposit’ or an FD and set sail into the sunset.
When you have a relatively large amount sitting around, you could put it in an FD (Fixed Deposit) which will slowly gain some interest over the time that you have put it away. So you can say put 50,000 in an FD for 12 months and after that you will can either continue the FD (renew it) or encash it into your account.
We need so much more now, but because a fixed deposit doesn’t provide the a great interest rate, that does not mean we shouldn’t use it at all. This is where the risk averse will park the short term savings. Short term meaning, something that you will need in the next year or two.
Before I get ahead of myself, there is another type of deposit, it’s called RD or Recurring Deposit. This is where you transfer a fixed amount of money in every month for a pre-determined period. And at the end of the period, you receive the total amount. For example, you can transfer Rs.1000 every month for 12 months and at 6% interest rate and you will receive a total of 12060 at the end of one year. ‘So I just made 60 bucks?’ Erm, Yeahhhh. But you actually saved Rs.12060. It could have been ‘0’. Kachinggg!
One thing that I do is use fixed deposit as an Emergency Fund. So wait, here is what I did. I calculated that I needed around 300,000 for the 6 months. Started a recurring deposit that transferred around 10,000 every month for the next 2.5 Years. End of 2.5 years, I had 300,000 for my emergency fund, which I immediately moved to a Fixed deposit. Now it just sits in one corner raking up interest and growing while I do other things with my money.
I do not advise you go this route for long term savings because you barely break even given that the rate of inflation is higher than the rate of interest in some banks. This should be for your short term plans and perhaps your emergency fund.
Come up with a plan for yourself, and if you need company doing this, reach out to me at svr@thewellnessstudio.com and we can do it together!
The Money Wellness Studio 
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