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What Is a Recurring Deposit?

A recurring deposit refers to a regularly occurring, automatic deposit that you make. For example, if you set up a monthly recurring deposit for your portfolio, you will automatically invest the same amount at the same time each month, depending on the amount and date that you set.

🤔 Understanding recurring deposits

If you’ve ever made recurring payments—for your credit card, student loans, mortgage, etc.—you know just how satisfying they can be. You don’t have to think twice about making sure you make your payments on time and, after a while, you stop noticing that the money is even gone. 

Recurring deposits for investments offer that same satisfaction—and more. Sure, blindly depositing a specific sum of money into an investment account every month (or on any regular basis)—without researching market trends or paying mind to volatility—can be nerve-wracking at first. But, over time, you will certainly see the growth impact that automating your investments has on your account.

What this means for you

There are plenty of reasons why recurring deposits benefit you. Here are three.

1. Recurring deposits offer you substantial compounding interest.

The more money you deposit over time, the more compounded interest you will earn over time. That’s because, when you put money away in a savings account, a money market account, or an investment account, for example, that institution will pay you interest.

That interest can compound over time. Compounded interest is what any investment pays on your principal (the amount that you’ve initially deposited) plus any other interest you’ve already earned. So, the sooner you get started investing, even just a small amount, the longer your money has to make more money.

2. Recurring deposits help you invest strategically, not emotionally.

Trends change. News cycles shift. And, chances are, by the time it reaches the public, it’s already influenced the markets. When you automatically put funds into an investment account every month, you contribute to an investment strategy—instead of investing based on the current market conditions or just picking of-the-moment stocks based on triggering trends or flashy news.

Investing $100 every month regardless of the market prices, for example, helps you stay on track toward your ultimate financial goals. This is known as dollar-cost averaging.

3. Recurring deposits are ideal for anyone who can’t afford to invest a lump sum.

When you think of investing, you may think of ultra-wealthy people who put one lump of money—say $10,000—into an investment account and watch it grow into tens of thousands more. But you know that you can’t afford to do that right now, or maybe not even any time soon. And that’s alright.

Making recurring deposits is one of the best ways to contribute to an investment account without dumping your entire life savings in at once. You can keep contributing small amounts of money—perhaps a percentage of each paycheck—every month or so, which will add up over time.

Disclosures is the trade name of Quantalytics Holdings, LLC., LLC is a wholly-owned subsidiary of Quantalytics Holdings, LLC ("Quantalytics"). Quantalytics offers automated financial advice tools through Quantalytics Investment Advisors, LLC ("QAI"), an SEC-registered investment advisor. QIA’s investment advisory services are ONLY available only to residents of the United States. Disclosures concerning QIA’s investment advisory services are available on its Form ADV filed with the SEC. The content in this newsletter is for informational purposes only and does not constitute a comprehensive description of's investment advisory services.

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