Designed to save a specific sum each month, and interested in exactly what that will amount to? The RD calculator is helpful for individuals interested in planning recurring deposit for their future needs without worrying about the guesswork. You don't have to do all the arithmetic yourself to calculate exactly what the maturity will be on the compounding of each of your monthly payments, interest and the number of months; you just enter your monthly deposit, interest rate and number of months and the exact maturity value is calculated instantly. This tool helps you plan with confidence in mere seconds, whether you're on a salary saving up an emergency fund or you're a first-time savings taker looking through bank schemes.
What Is a Recurring Deposit (RD)?
Recurring Deposit is a type of saving account provided by banks/NFIs where a fixed amount is deposited at regular intervals (monthly) for a specified period and a fixed rate of interest is credited to the account, typically with compounding interest quarterly. It's meant for those who prefer to save in a systematic and goal-oriented manner than invest in a single chunk.
Key Features of an RD
RDs are low-deposit options, usually have a minimum deposit of just a few thousand dollars, have flexible term lengths of typically 6 months to 10 years, and have guaranteed and predictable returns.
Who Should Choose an RD?
RDs work well for people with a steady salary, students, and those who would like to invest in the stock market but would rather make small, monthly investments instead of buying it all at once.
RD Calculator Formula Explained
The calculator uses a commonly used formula which gives consistent results for any of the banks or scenarios being compared:
Maturity = Σ R × (1 + r/4)^(quarters remaining)
In this case R = monthly installment and r = the annual interest rate. Each payment is made on a separate day, so each payment will grow for a different number of quarters until it matures — the first payment will grow for the most number of quarters, the last payment will grow for the fewest number of quarters. All these instalments are added up by the calculator to reach the total value.
How to Use the RD Calculator
Its use requires less than a minute:
-
Type in the monthly amount that you will be investing.
-
Type in the interest rate you can get from your bank on a yearly basis.
-
Choose the time period (months or years).
-
See the maturity value up on the spot, and adjust any of the inputs to compare options.
RD Calculator Example
Suppose Rs 3000 is invested each month for 2 years at 5 per cent rate of interest.Suppose ₹ 3000 is invested monthly for 2 years at 5 per cent per month interest. During the period, you would have invested a total of ₹72,000. The quarterly compounding would be applied to each instalment depending on the number of quarters left to maturity and the total interest earned would be about ₹3,800, giving a maturity value of about ₹75,800. Try entering numbers of your own to see what impact would the additional deposit or term have?
Benefits of Using an Online RD Calculator
Not only will an RD calculator save some time, it will also eliminate the chance of human error in manual calculations and provide you the opportunity to run several "what if" scenarios before making your cash investment.
Saves Time & Reduces Errors
It's cumbersome and easy to make mistakes when calculating the compounding of dozens of monthly payments. The calculation process is carried out instantly, with the calculator.
Helps Compare Multiple Banks or NBFCs
The interest rates on RDs will differ from bank to bank. With a calculator you can compare the effectiveness of the same payment to the bank on a monthly basis before you open an account with them.
TheTopStockBroker's RD calculator can help you compare the returns of recurring deposits with various banks before you allocate your monthly savings to the bank so that you get the highest maturity value instead of selecting a familiar bank.
Useful for Goal-Based Planning
If you're saving for a holiday, a new gadget or an emergency fund, you will be able to plan monthly saving targets when you know exactly the amount needed by the end of the saving period.
RD vs FD – Which Is Better?
Depending on the investment, an RD is a good alternative to a Fixed Deposit. An FD requires a lump sum upfront and is appropriate for individuals that already have superfluous cash on hand. An RD, on the other hand, is more appropriate for people who wish to save over time, but not put a massive amount of money down up front. They usually have the same interest rates and compounding quarterly, so it depends on how you're going to spend cash, rather than the returns.
Things to Remember Before Investing in an RD
If you have interest income on RD, it is included in your income, and taxed at your applicable income tax slab rate. Typically, banks charge a penalty when the RD is closed before its maturity date and will pay a less than expected interest rate. It's also important to validate the bank's missed payment policies prior to beginning, as missed payments may impact your ultimate payout.
Calculate Your RD Maturity Instantly – Try the Free RD Calculator Now
Disclaimer: This content and calculator are for informational and educational purposes only and do not constitute financial or investment advice. Please verify current interest rates with your bank before investing.