{"id":777578,"date":"2026-09-21T07:16:09","date_gmt":"2026-09-21T07:16:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/777578\/"},"modified":"2026-09-21T07:16:09","modified_gmt":"2026-09-21T07:16:09","slug":"saving-for-emergency-fund-of-%e2%82%b910-15-lakh-heres-how-fd-laddering-can-help-and-whether-you-should-consider-it","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/777578\/","title":{"rendered":"Saving for emergency fund of \u20b910-15 lakh? Here\u2019s how FD laddering can help and whether you should consider it"},"content":{"rendered":"

An emergency fund should remain accessible for unexpected expenses, such as medical treatments, urgent home repairs, job loss, etc. However, parking a large sum idle entirely in a savings account may not be the most efficient way to manage it.<\/p>\n

For investors looking to set aside \u20b910-15 lakh, the key challenge is balancing liquidity with returns.<\/p>\n

One strategy that can help achieve both is FD laddering, which involves splitting money across multiple fixed deposits with staggered maturity periods instead of investing the entire amount in a single long-term deposit.<\/p>\n

This approach allows portions of the corpus to mature at regular intervals, providing easier access to funds when needed while reducing the risk of breaking a long-term fixed deposit (FD) prematurely. It can also help investors take advantage of changing interest-rate cycles. <\/p>\n

Repo rate hike soon?<\/p>\n

The Reserve Bank of India (RBI<\/a>) kept the repo rate unchanged at 5.25% in its August 2026 monetary policy committee (MPC) meeting. However, a recent SBI Research report projected two 25-basis-point hikes, one each in October and December, citing rising crude oil prices and inflationary pressures.<\/p>\n

Repo rates and FD rates are closely linked. When the repo rate<\/a> rises, financial institutions often increase FD rates. If the repo rate rises over the next three months as anticipated, investors will have an opportunity to lock in higher interest rates on their deposits<\/p>\n

How does FD laddering work?<\/p>\n

Individuals can structure a mix of 1-year, 2-year and 3-year FDs instead of locking the entire amount into a single tenure.<\/p>\n

For example, an investor with \u20b910 lakh can divide the amount across multiple fixed deposits:<\/p>\n

\u20b93 lakh in a 1-year FD \u20b93 lakh in a 2-year FD \u20b94 lakh in a 3-year FD<\/p>\n

For a \u20b915 lakh emergency fund, the same approach can be followed by splitting the corpus across different FD tenures:<\/p>\n

\u20b95 lakh in a 1-year FD \u20b95 lakh in a 2-year FD \u20b95 lakh in a 3-year FD<\/p>\n

This way, the entire emergency corpus is not locked into a single tenure, while a portion becomes available for withdrawal at regular intervals. The same strategy can be applied to any lump-sum amount, depending on your financial requirements and expectations for near-term interest rate changes.<\/p>\n

An investor can also invest their funds in FDs with shorter maturities, such as 3-6 months. This can be considered if you need the money in the near future.<\/p>\n

What is penalty for premature withdrawal of FD?<\/p>\n

Banks in India typically charge a premature withdrawal penalty of around 0.5% to 1% on the applicable interest rate when an FD <\/a>is broken before maturity, according to a report by the ICICI Bank.<\/p>\n

The exact charge varies across banks and deposit products and is intended to compensate for the loss a lender incurs from early withdrawal.<\/p>\n

Therefore, it is crucial to read the terms and conditions of your FD to understand the specific penalties and charges that apply. However, even though you could lose some interest as a penalty, you will still receive your initial money back.<\/p>\n","protected":false},"excerpt":{"rendered":"An emergency fund should remain accessible for unexpected expenses, such as medical treatments, urgent home repairs, job loss,…\n","protected":false},"author":2,"featured_media":777579,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[84,24200,256320,256319,4176,53582,814,256318,23919,4174,4175,113087,256317,256316,256315,56,54,55],"class_list":["post-777578","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-emergency-fund","tag-fd-interest-rates","tag-fd-laddering-strategy","tag-finance","tag-fixed-deposit","tag-interest-rates","tag-monetary-policy-meeting","tag-mpc","tag-personal-finance","tag-personalfinance","tag-repo-rate","tag-repo-rate-decision","tag-repo-rate-hike","tag-sbi-research","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/777578","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=777578"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/777578\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/777579"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=777578"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=777578"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=777578"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}