RD Calculator
Total Investment
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Interest
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Maturity Value
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RD Calculator
Recurring Deposits (RDs) are a type of fixed-term investment that allows individuals to deposit a fixed amount every month instead of a lump sum, as in Fixed Deposits (FDs). It is a popular savings option offered by banks and financial institutions, helping investors build a disciplined approach to saving while earning interest on their deposits. The interest in RDs is compounded quarterly, leading to substantial returns over time.
The interest rate on RDs varies based on the tenure of the deposit. Generally, shorter tenure RDs (6 months to 1 year) offer slightly lower interest rates compared to longer tenure RDs (2 to 10 years). Most banks and financial institutions offer interest rates ranging between 5.50% to 7.50% per annum, with senior citizens often receiving an additional 0.25% to 0.50% higher interest. Choosing the right tenure based on financial goals can help maximize returns while ensuring liquidity when needed.
How Can an RD Calculator Help You?
Calculating the maturity amount of an RD manually can be challenging due to quarterly compounding and multiple variables involved. An RD calculator simplifies this process by:
- Providing an instant and accurate maturity amount, eliminating manual errors.
- Helping investors plan their finances efficiently by estimating future returns.
- Allowing users to compare different RD tenures and interest rates to make informed decisions.
- Saving time and effort by performing complex calculations instantly.
Formula for RD Maturity Calculation
The maturity amount for an RD is calculated using the following formula:
A = P*(1+R/N)^(Nt))
Where:- A = Maturity amount
- P = Monthly deposit amount
- R = Annual interest rate (in decimal)
- N = Number of compounding periods in a year (4 for quarterly compounding)
- T = Tenure in years
Example Calculation
If an investor deposits ₹5,000 per month for 1 year at a 7.5% annual interest rate, the calculation will be:
After solving, the maturity amount will be approximately ₹62,117.26
How to Use the RD Calculator on Tradejini
- Enter the monthly deposit amount – The fixed sum you plan to invest every month.
- Specify the investment tenure – The total duration for which you will be making deposits.
- Input the expected interest rate – The annual interest rate provided by the bank or financial institution.
- Click on ‘Calculate’ – The calculator will instantly display the total maturity amount and interest earned.
Frequently Asked Questions
Yes, RD interest is taxable as per your income tax slab. Additionally, TDS (Tax Deducted at Source) may be applicable if interest earned exceeds the prescribed limit.
RD interest is compounded quarterly, meaning the accrued interest is added to the principal every three months.
Missing an RD installment may attract penalties, which vary across banks. It is advisable to check with the respective financial institution for specific terms.
Yes, premature withdrawal is allowed, but it may result in a lower interest payout or penalty.
No, RD interest rates vary between banks and financial institutions. Checking the latest rates before investing is advisable.
Is the interest earned on RDs taxable?
Yes, RD interest is taxable as per your income tax slab. Additionally, TDS (Tax Deducted at Source) may be applicable if interest earned exceeds the prescribed limit.
