Hi Basu,
In some of your posts, you have mentioned about eFD. What is that. is it the same FD in banks? Does it have a lock in period or is it easily possible to liquidate in case of emergency? and can I transfer money into it every month?
Rajith-eFD is nothing but a normal FD which you creates using your net banking facility. I suggest to create eFD to keep your emergency fund. Because with the click of button, you can liquidate it. The amount will be in your savings account. For banks, it acts exactly like typical FDs. So the rules and regulations will be same as that of typical FDs. But the advantage over other FDs is the LIQUIDITY. You have to create manually but can’t transfer automatically into eFDs.
thanks for your prompt response. So in this case, I have to open multiple FD’s for me to be able to save cash every month? I hope my question is clear. I am checking if I can transfer money on a monthly basis to the same FD?
Rajith-I suggest this only to keep your emergency fund. However, if you have any short term goals like less than 3 years, then you can opt this. You can’t create an eFD automatically by transferring money on regular base. You have to create it manually. If your concern is idle money in savings account, then opt for Auto Sweep Option (I am not sure with what name your bank will offer this service).