I have multiple RD a/c in my bank for annual renewal services for the following:-
- Aquaguard AMC renewal
- Washing Machine AMC renewal
- Annual Health checkup
- Health Insurance Premium Payment
- LIC premium payment
- Term insurance premium payment
- Other Misc. renewal and yearly servicing
So a total of about Rs 8000 is auto-debited every month from my savings account into these multiple RD accounts which have a maturity period of one year. This helps me plan and accumulate funds for my non-avoidable expenses. The bank RD account gives me around 5.5-6% of interest on the principal. Also, TDS has to be considered while filing ITR as overall bank interest gain exceeds Rs 10000 per year.
Once a RD fund matures, I renew that particular service and start another RD to plan for the next year.
Now, I am wondering if there is a better to plan this out? Would you recommend depositing that EMI in a Short-Term Debt fund instead of keeping in RD a/c, and withdrawing when needed to renew the services? Or is there an alternate way to maximise the returns while saving in EMI for the annual expenses?