When I have started earning, first thing I have done is to start a recurring deposit which was the best investment I knew at that time. Recurring deposit is just like a SIP but you are doing in the bank and the interest rate is quite less. But at that time, I was not worried about the interest, for me savings was the first priority.
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Till now I have been using the RD for my short term goal. For example, if I have a goal in 1 year, I will only start investing through a RD in a bank to get that money after a year. Now the HDFC has started giving an option for Flexi RD or Passoion Fund. The best part of the Passion Fund is that, it works like a RD but you can add more into it when you have the money.
For example you need Rs 12K after a year. So naturally you will start investing Rs 1K every month. And at any month you have Rs 1K more, then what you can do is to add more to your Passion Fund which is known as TopUp which uou can do upto twice the amount of your RD. You can add upto 3 times in a month along with the regular RD amount. You can start the Passion Fund with as low as Rs 1K and thus you can kep investing till 10 years.
Now think about it when you want to build a emergency fund, the best thing to do is to add money every month into the flexi RD and thne once you have the money you can convert that to a FD or move it to a liquid mutual fund. And I have started using the Flexi RD like anything. If I have any big expense coming up in next year, I will start saving small amount through Flexi RD and reach to that amount.
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