RD CALCULATOR
RD
Invested Amount
Rs. 0
Estimated Returns
Rs. 0
Total Value
Rs. 0
What is the Recurring Deposit (RD)?
Recurring Deposit (RD) is a savings scheme that allows customers to deposit a fixed amount of money periodically (usually on a monthly basis). It is an ideal way to build disciplined savings over time.
What is a Recurring Deposit (RD) Calculator?
The RD Calculator is a financial tool used to calculate the maturity value of your investments. By inputting your monthly deposit amount, annual interest rate, and deposit tenure, it provides estimated returns and the final maturity value of your investment.
What is the formula for Recurring Deposit (RD)?
The formula to calculate the maturity amount for RD is:
A = P × (1 + R/N)NT
where:
- A is the maturity amount
- P is the monthly deposit amount
- R is the expected annual interest rate
- N is the compounding frequency (usually monthly, quarterly, half yeatly and yearly)
- T is the tenure in years
Let's explore how Recurring Deposit (RD) works with an example. A Recurring Deposit is a savings scheme where you deposit a fixed amount every month, and the amount grows with interest over a fixed tenure. This is an excellent way to save and earn consistent returns over time.
Let's take an example to understand it better:
Suppose you deposit Rs. 5,000 every month in an RD account for a tenure of 2 years at an annual interest rate of 6%, compounded monthly.
We have:
- Monthly Deposit (P): Rs. 5,000
- Annual Interest Rate (R): 6% = 0.06
- Monthly Interest Rate: 0.06/12 = 0.005 or 0.5% per month
- Number of Months (T): 24 months
For Recurring Deposits, we calculate the future value of each monthly deposit:
Total Amount = P × [(1 + r)n + (1 + r)n-1 + ... + (1 + r)]
Where r = 0.005 and n ranges from 24 to 1 for each deposit
Total Investment = Rs. 5,000 × 24 = Rs. 1,20,000
Interest Earned ≈ Rs. 7,755.42
So, the total maturity amount for this RD will be approximately Rs. 1,27,755.42.
Please Note*: 5% tax shall be applicable as per current tax policy.
Difference Between Fixed Deposit (FD) and Recurring Deposit (RD):
| Features | Fixed Deposit (FD) | Recurring Deposit (RD) |
|---|---|---|
| Investment Pattern | Single lump sum deposit | Regular monthly deposits |
| Investment Amount | Requires a larger one-time deposit | Can start with smaller monthly contributions |
| Interest Calculation | Calculated on the full amount for the entire tenure | Earns interest on each deposit for the remaining tenure |
| Flexibility | Fixed tenure; early withdrawals may incur penalties | Flexible; occasional missed deposits are allowed |
| Ideal For | Investors with a lump sum looking for secure returns | Individuals with regular income aiming to save monthly |
| Returns | Generally higher interest rates | Slightly lower interest rates compared to FD |
| Loan Facility | Loan available up to 90% of deposit value | Loan available, but with lower limits than FD |
How to Use the RD Calculator
- Enter the monthly deposit amount, interest rate, and tenure.
- Click "Calculate" to view your maturity amount and total returns.