In a small town lived Maya, a cautious investor who had always been wary of the stock market. The idea of putting her hard-earned money into something as unpredictable as equities made her nervous. She preferred the safety of her savings account, where she earned a modest 6 to 7.5% per year. Though she knew these returns barely kept up with inflation, the security of her capital was what mattered most to her.
Maya often found herself struggling to save consistently. Every month, after paying bills and indulging in a few small luxuries, there wasn’t much left. She had heard about people investing in mutual funds, debt funds, and other market-linked products, but they seemed too complicated and risky for her taste.
One day, Maya’s friend Raju introduced her to a concept called the “Ladder Strategy.” He explained it in a way that made perfect sense to her. He asked her to imagine setting up a series of small, recurring deposits—like planting seeds that would gradually grow into a flourishing garden.
“Think of it this way,” Raju said. “You start by creating a small recurring deposit (RD) account. Let’s say you start with ₹1,000 in June. The next month, you set up another RD for the same amount, and you continue doing this each month. By the time you reach May of the next year, you’ll have 12 RDs, each maturing one after the other.”
Maya listened carefully as Raju continued. “In the first month, only ₹1,000 will be debited from your account. But each month, as you create a new RD, the total amount debited will increase by ₹1,000. By May of the next year, you’ll have ₹12,000 invested, and from June onwards, each month, one of your RDs will mature, giving you a steady stream of returns.”
Maya’s eyes lit up. The strategy seemed simple and achievable. It was a way for her to save regularly without taking on the risks she feared. Raju pointed out that this approach was particularly effective for risk-averse people, just like her, or those who found it difficult to save consistently, such as someone who had just started their first job or tended to spend impulsively.
“This is a safe bet,” Raju said, “and over time, you’ll see your savings grow. And who knows? Once you’ve built this habit of saving, you might even feel confident enough to explore other investment avenues, like starting a Systematic Investment Plan (SIP) in mutual funds.”
Maya felt a sense of relief. The ladder strategy offered her a way to start small, save consistently, and eventually, without taking on much risk, grow her wealth. It wasn’t just about earning a higher return—it was about building a habit, and creating a foundation that could lead to greater financial security in the future.
With newfound confidence, Maya decided to give it a try. As the months passed, she watched her savings grow, and with each maturing RD, she felt a little more empowered. The ladder strategy had given her the courage to take control of her financial future, one small step at a time.
Simplified Money Talks 