What is Recurring Deposit (RD)?
Recurring Deposit (RD) is a financial investment option offered by banks and financial institutions, primarily in India. It is a type of savings scheme that allows individuals to save money systematically over time. In an RD, you make regular monthly deposits of a fixed amount into your account, and these deposits accumulate with interest until the end of the predefined term. RDs are an attractive option for those who want to save money regularly and earn a fixed interest rate on their savings.
Here’s a guide on how to use the Recurring Deposit (RD) Calculator:
- Monthly Investment Amount (Rs.): Start by entering the amount you plan to deposit each month into the “Monthly Investment Amount” field. This is the fixed sum of money you intend to contribute regularly.
- Investment Period (years): Input the duration for which you plan to make monthly deposits in the “Investment Period” field. It represents the total number of years you intend to save with the RD.
- Expected Annual Returns (%): Enter the expected annual interest rate offered by your bank or financial institution in the “Expected Annual Returns” field. Typically, this interest is compounded monthly.
- Calculate: Click the “Calculate” button. The RD Calculator will use the information provided to estimate the maturity amount, total investment, and interest earned.
- Maturity Amount (Rs.): The result will be displayed in the “Maturity Amount” field. This is the total amount you can expect to receive at the end of your RD tenure, which includes your monthly contributions and earned interest.
- Total Investment (Rs.): This field shows the sum of all the monthly deposits you made throughout the investment period.
- Interest Earned (Rs.): The “Interest Earned” field displays the difference between the Maturity Amount and the Total Investment. This amount represents the interest you have earned on your recurring deposits.
Using the RD Calculator helps you plan your recurring deposits effectively and lets you visualize the growth of your savings over time. Keep in mind that the actual interest earned may vary slightly based on the compounding frequency and the specific terms and conditions of the bank or financial institution where you hold your RD. Always consult your chosen institution to confirm the details and ensure accuracy. RDs are a convenient way to accumulate savings gradually and secure your financial future. They provide a disciplined approach to savings while earning a steady interest rate on your investments.