When it comes to safe investment, fixed deposit is one of the popular options among people. It offers guaranteed returns at low risks. However, the traditional method of locking all funds in a single fixed deposit limits flexibility and cannot access funds when needed. That’s where FD Laddering comes in, a strategy that allows you to maximize returns, maintaining flexibility and access to funds when required.
What Is FD Laddering?
FD laddering is a fixed deposit approach where you divide an investment into several FDs, each having a different maturity period, instead of putting all your money into a single long-term fixed deposit.
For instance, instead of putting all of an investment of RS 500,000 into a single 5-year fixed deposit, you can divide it into five separate fixed deposits of RS 100,000 each, maturing every year from the first to the fifth year.
FD Laddering functions much like a regular Fixed Deposit. The main difference is that, instead of placing your entire investment into one FD, it divides the amount into many deposits with different tenures or maturity periods.
Advantages of FD Laddering
FD laddering is considered a smart investment strategy as it balances safety, liquidity, and returns.
1. Improved liquidity
With Fixed Deposits, your money gets locked for long periods. In FD Laddering, you can access some portion of your money every single year. This means you can use your money without breaking your Fixed Deposits.
2. Better returns
With FD Laddering, one of your Fixed Deposits will mature every year. Since interest rates change frequently, reinvesting your matured Fixed Deposits will help you get better yields.
3. Decreased risk
With FD Laddering, your funds get locked over periods, which reduces the possibility of having all your money stuck in periods of low interest. This means you won’t have to make an early withdrawal, which usually comes with a monetary penalty.
4. Increased flexibility
This method lets you change your investment strategy to meet new or different financial goals such as an emergency fund, preparing for higher education, or buying a house.
FD Laddering vs. Single Fixed Deposit
| Factor | FD Laddering | Single FD |
| Liquidity | High – one FD matures regularly | Low – entire amount locked |
| Returns | Potentially higher with reinvestment | Fixed for entire tenure |
| Risk | Spread across tenures | Concentrated in one rate period |
| Flexibility | Can adjust according to goals | Limited |
| Best For | Investors seeking balance | Investors preferring simplicity |
FD laddering is more beneficial for individuals who want a balance between safety and flexibility, while single FDs may suit those who prefer minimal management effort.
How to Create an FD Ladder Step by Step
- Decide how much you want to invest. Then divide that funds into different parts. For example, if you want to invest Rs.500,000, split it into five parts of Rs. 100,000 each.
- Assign different maturity periods to each FD. Choose tenure according to your goal and fund needs such as six months, one year, two years and so on. This creates ladders, ensuring one FD matures each year.
- Reinvest each mature FD into a new one. When the one-year FD matures, reinvest it for 5 years. Repeat this with each maturity. Over time, you’ll have one FD maturing each year.
- Automate your renewal or reinvestment options to reduce the risk of missing the maturity date.
- Regularly monitor the interest rates, as interest rates often change.
Maximize Your Returns with FD Laddering at Global IME Bank
Global IME Bank, one of the leading commercial banks in Nepal, offers various Fixed Deposit options to grow your savings safely and efficiently. With competitive interest rates, suitable tenures, and easy digital access, it is ideal for building a smart FD ladder.
Global IME Bank extends flexible deposit schemes for both individuals and institutions, starting from NPR 10,000. You can choose tenure options ranging from 3 months to 5 years or more to help you plan your investments according to your goals. Customers can open, manage, and renew their FDs anytime, anywhere with complete security and convenience through the Global Smart+ mobile app.
How to Structure Multiple FDs Using Global Smart Plus ?
To build an FD ladder with Global IME Bank:
- Log into the Global Smart Plus app.
- Navigate to the Hub section and click on Fixed Deposit.
- Select the types of fixed deposit that suits you.
- Enter the amount and tenure according to your need.
- Repeat the same steps to create a ladder.
Note: You must have a sufficient amount in your account.
Start your FD Laddering journey today with Global IME Bank and make your savings work smarter.
Frequently Asked Questions (FAQs)
What is the main purpose of FD laddering?
To balance liquidity and returns by spreading your investments across multiple fixed deposits with varying maturities.
Can I start FD laddering with a small amount?
Yes, you can create smaller FDs with varied tenures.
Can I apply for FD online?
Yes, you can directly apply via Global Smart Plus without visiting the bank.
Can I make an FD ladder for a short period of time?
Yes, you can create an FD ladder by taking FDs with tenures like 3 months, 6 months, or any period as desired to achieve your financial requirements.
How many FDs should be contained in a ladder?
It will depend on your aim and liquidity requirements, typically 3 to 5 at annual intervals, is a good starting point.
