Everything you need to know about FD Laddering

What is Fixed Deposit Laddering?

Are you looking for ways to increase your fixed deposit returns? The most common factor that people investing in FDs are constantly looking at is the ROI (Return on Investment). Fixed Deposits have always been the most preferred and popular form of low-risk investment.

Where there is a will, there is always a way. It is possible to get the maximum interest benefit from your Fixed Deposit. All you need to have, is meticulous financial planning. In the same way that Marie Kondo asks, “Does it ignite joy?”, it is necessary for investors to take a look at their investment portfolio and ask themselves “Does this investment add more profit to my portfolio?” If you want to maximise your interest income, FD laddering is a terrific investment approach that you should consider in your search for a profitable investment.

What Does FD Laddering Mean?

Laddering deposits is a technique in which investors invest in multiple fixed deposit plans with different tenures and maturities. Laddering deposits refers to the practise of splitting deposits into separate ladders (Investment plans) that an investor can keep increasing one level at a time.

3 Reasons Why FD Laddering is Profitable

Maximises Your Returns

Investing in laddering fixed deposits helps in getting higher returns. Let’s assume that an investor is investing in two fixed deposits, one with a maturity period of 3 years and the other with a maturity period of 5 years, the investor is definitely going to earn an attractive interest income from both the investments, thereby increasing their returns a little more. Investors can even opt for a cumulative or a non-cumulative fixed deposit based on their financial needs. Investing in Corporate FDs can help maximise and earn higher interest rates than bank FDs. By investing in a fixed deposit from a reputed NBFC like Shriram Finance one can get an interest rate up to 9.05%*p.a.

Different Maturity Periods, Different Financial Purposes

Based on your financial needs, laddering FDs can be extremely beneficial. At every stage of life, we will have to manage expenses and we will be in need of funds to balance the situation. Planning your major financial needs and investing in fixed deposits can prove to be extremely profitable and helpful. 

Flexibility and Fund Liquidity

Planning and investing your finances into shorter deposits can come in handy in times of financial crisis. In an FD ladder, the amount is divided into smaller parts, each of which matures at a different timeline. In times of a sudden financial emergency, you can opt to break just one part of your fixed deposit investment rather than losing your fixed deposit savings as a whole. The flexibility in terms of tenure when opting for a fixed deposit can help you plan your FD ladder according to your financial requirements.

How to Build an Fixed Deposit Ladder?

Creating an FD ladder is one of the finest ways to manage fixed-income securities. Investors that rely heavily on these fixed deposits as a source of their investment, particularly senior citizens, can use them successfully to boost their returns and control liquidity in their investments. Instead of booking one large FD for the long term, you basically divide it into smaller FDs when you create an FD ladder.

When Should One Plan an FD Ladder?

The perfect time to invest in a laddering FD is during a hike in the repo rates, which is exactly now. Booking several FDs at different maturities now can help you lock in your investments at a higher interest rate. Laddering FDs is a perfect investment technique for Senior Citizens who rely on the interest income for their financial needs. The best part of investing in fixed deposits for Senior Citizens is that they can get a special interest rate of 0.50%*p.a. If you have short-term and long-term financial goals, you can personalise your FD tenures based on your financial needs. The best practice when it comes to planning your FD is to use Fixed Deposit Interest Calculator so that you can plan and customise the tenure of your FD ladder according to the best possible returns.

Maximise Your Returns, Invest Now

The best way to get higher interest rates in a low-risk investment like a fixed deposit is to make use of the FD laddering technique. Investing in a fixed deposit at Shriram Finance can help maximise your FD even more. By investing in a sum of 1,00,000 in a cumulative FD plan at Shriram for a tenure of 5 years one can get an interest as high as 10.91%*p.a. which is inclusive of the 0.50%*p.a. additional benefit for senior citizens and 0.10%*p.a. special interest benefit for women depositors. Invest now in a laddering fixed deposit at Shriram Finance and earn profitable returns.

Key Highlights

  1.         Investing through the laddering FD technique helps diversify your portfolio
  2.         FD Ladder enables you to earn better interest rates while keeping your money safe
  3.         Investing in laddering FD addresses liquidity demands by distributing maturity funds in instalments, allowing you to avoid premature withdrawals
  4.         Laddering FD is the best choice for Senior Citizens who are dependent on their interest income from investments