What is FD laddering? Easy way to convert ₹1 lakh investment into maximum profits

FD Laddering Strategy: Investors who want to stay away from market fluctuations consider fixed deposits as a reliable option. In FD, investors also get secure returns along with fixed interest rates. Due to which the investor does not have to take much risk. However, if you include planning for FD laddering, there may be a change in your returns. Let us know, what is FD laddering and how does it work?

What is FD laddering?

FD laddering is a method in which investors make multiple fixed deposits for different tenures. So that every FD gets completed every now and then. This method is especially useful for those who want to make safe investments for the long term.

The biggest advantage of FD laddering is that you keep getting money from time to time. Also, due to investment in different tenures, there is an opportunity to avail the benefit of better interest rates.

Benefits of FD laddering

By adopting FD laddering, the investor gets many benefits. By investing money at different times, you can get the benefit of better interest rates. Besides, there is a possibility of total return also increasing.

This method also helps in tax planning and reduces risk. If you are getting better interest rates at the time of maturity, you can reinvest it.

FD laddering from Rs 1 lakh

If you want to invest Rs 1 lakh in FD, then it makes more sense to divide it into small parts instead of investing it all at once. For example, you can make FD for different periods of time by dividing it into Rs 20-20 thousand. Due to which one FD will be completed every year.

When an FD is completed, the money can be used as per need or the remaining money can be reinvested. Similarly, by adopting the same method with other FDs, your money runs continuously. Besides, there is also hope of getting higher returns.

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