I like the new flexible Recurring Deposit Scheme being marketed by ICICI Bank. You can open an RD account for any period between 6 months and 10 years. The rate of interest is what you would expect in an FD of the same tenure opened today.
It is branded as IWish, an account you open for achieving your dream, say, buying a car costing 8 lakhs 8 years from now. You put in a minimum of Rupees 500 to open the account, and then keep putting in any amount as and when you feel like till the target amount is achieved, then wait for the maturity date and withdraw the amount along with interest. Even if you achieve the target before the maturity date, you wait till the maturity date to withdraw the money. Any premature withdrawals attract the usual penalty (1%) like any normal FD or RD.
I don't know if the guys at ICICI have realized this or not, but they are giving each customer an option to open ten completely flexible deposits for amounts upto 10 lakhs each, which act as an insurance against any drop in interest rates. Each of us should open ten deposits of Rupees Ten Lakhs target amount, by depositing Rupees 500 only. The durations can vary from two years to ten years. In case the interest rates in the economy drop drastically, you can ramp up the amount of deposit in any of the accounts, since the interest rates have been locked in at the time of opening the deposits. A completely flexible option to put in any amount at a higher interest rate, for the next ten years, without any strings attached!
In case the interest rates don't fall, then let your 500 rupees with interest come back to you at maturity. No loss, no harm done.
Go for it. It is seldom that you get something for nothing!
( Thanks to my friend Prasad, who though a techie, is more of a finance whiz than most finance guys – he is the one who told me about this)