What is FD Laddering?
Split your investment into multiple FDs with staggered maturities. Example:
- ₹10L investment split into 5 FDs of ₹2L each
- FD1: 1-year tenure
- FD2: 2-year tenure
- FD3: 3-year tenure
- FD4: 4-year tenure
- FD5: 5-year tenure
Benefits of Laddering
- Access to funds every year
- Reinvest at higher rates if interest rates rise
- Reduce reinvestment risk
Case Study: ₹50L Investment
A 45-year-old splits ₹50L into 10 FDs:
- ₹5L each for 1–10 years
- Average rate: 7%
- Total interest: ₹17,50,000 over 10 years
How to Implement
- Divide corpus into equal parts
- Create FDs with sequential maturities
- Reinvest matured FDs at current rates