RD Calculator: Plan Your Recurring Deposit Returns
RD Calculator
Recurring Deposits are an investment instrument similar to Fixed Deposits. Unlike fixed deposits where you benefit a lump sum and wait for tenure to mature, in Recurring deposits, the deposits are made periodically to your account. This habit instills financial discipline. Recurring deposits are offered by many banks and NBFCs and even post offices. Millions of individuals from India benefit out of these RDs
What is a RD Calculator?
A Recurring Deposit Calculator is an online tool that helps you estimate the maturity amount and the interest earned from your RD investment. By entering details like monthly deposit amount, interest rate, and tenure, the RD calculator would provide an accurate maturity amount
The calculation of interest rate can be quite complicating for an average investor. It is the reason why RD calculator came into existence. RD calculator provides accurate returns when entered with correct details
Formula for RD Calculator with Example
The formula for calculating the RD returns which is compounded quarterly in most banks is given below:
RD Maturity Amount (M) = R * [ ( (1 + i)^n - 1 ) / (1 - (1 + i)^(-1/3)) ]
- M = Maturity Value (the total amount you will receive at the end of the RD tenure)
- R = Monthly Installment (the fixed amount you deposit each month)
- i = Rate of Interest per Quarter (Annual Interest Rate / 400, since interest is compounded quarterly, and 400 = 4 quarters * 100 for percentage)
- n = Total Number of Quarters (Loan Tenure in Years * 4)
Assuming you invest an amount of Rs. 5000 at an interest rate of 6.5% for an year, the calculation happens as given below:
M = 5000 ((1 + 6.5) ^4-1)/(1-(1+6.5)^(-1/3) ) = Rs. 62,144
Benefits of RD Calculator
- Accurate calculations: Provides exact value of your maturity amount and interest earned.
- Time-Efficient: It eliminates manual calculation which is tedious and it computes the value in few seconds
- Financial Planning: Helps plan your savings by showing different interest rates thereby helping you select the most appropriate plan
- Free to use: The calculator is absolutely free to use and can be utilized multiple times
Tax implications on RD
Similar to other investment instruments, recurring deposits also attracts charges. A TDS of 10% is deducted on the accrued interest charges from RD.
5 Unique FAQs for RD Calculator
1. Can I use the RD calculator for different tenures?
Yes, the RD calculator allows you to calculate the maturity value for different tenures and different banks
2. Does the RD calculator consider tax deductions?
None of the calculator takes into account taxes and other amounts
3. Can the RD calculator be used for varying interest rates?
Yes, you can input different interest rates and compare different banks to take a well-informed decision
4. Can I calculate the penalty for premature withdrawal using the RD calculator? No, the RD calculator does not factor in premature withdrawal and penalties