Introduction to the RD Calculator blog:

Looking to save money in a hassle-free way? A Recurring Deposit (RD) might be the perfect solution for you. Our blog explains what a Recurring Deposit is, how it works, its benefits and drawbacks. We have also included an RD Calculator for you. Start building your savings with recurring deposits today!

Before we introduce you to the RD Calculator, let us first understand what a Recurring Deposit is:

Recurring Deposits (RD), one of the low-risk investment instruments with moderate and guaranteed returns, are a well-liked investment choice in India. Together with many other advantages, it offers users the ability to choose their investment amount and tenure.

This investing instrument, provided by numerous banks and NBFCs, allows for adjustable duration options ranging from 6 months to 10 years, and it assists in directing monthly funds towards long- or short-term corpus formation.

So, for guaranteed wealth creation, investors might select a minimum amount to contribute each month during the duration. If you don’t have a large sum of money to accomplish short-term goals, putting a small portion of your monthly salary into the RD account will do the trick. We are slowly moving towards the RD Calculator 🙂 

Features of an RD:

To make it simple and easy to read, we have explained the features in a tabular form:

RD FeaturesApplicability
Rate of InterestBetween 5-8% (varies with each bank)
Amount of Minimum DepositFrom Rs.10
Tenure of InvestmentBetween 6 months and 10 years
Frequency of Interest calculationEvery Quarter
Mid-Term or Partial WithdrawalNot allowed
Premature Account ClosureAllowed with Penalty

The age of the investor has an impact on RD interest rates as well. For instance, senior citizens can benefit from higher interest rates than the ones now offered by standard RD programmes. Also, you can use the RD Calculator to determine your RD returns.

Benefits of an RD Investment:

RD is a completely risk-free investment with guaranteed returns that may be used to achieve both short- and long-term objectives. Thus, RD can be the ideal investment choice if you need money for the following needs:

  • Cost of higher education
  • Expenses on home renovation and furnishing
  • Abroad Vacations
  • Wedding expense

A recurring deposit system encourages disciplined saving because it compels you to make set monthly investments. It is advantageous more so for salaried people who must balance several financial goals with a fixed salary.

Throughout its life, RD interest is calculated at a fixed rate. In other words, if a bank offers a 6.50% interest rate on your RD, interest will be calculated at this rate regardless of shifting market trends or adjustments to your bank’s policy about the interest rate offered. As a result, you don’t need to be concerned about any interest rate reductions on RDs.These assumptions were taken into consideration while designing the RD Calculator.

Recurring deposit interest is taxable, and the bank would deduct TDS at a rate of 10% if the income exceeds Rs. 10,000. You can avoid paying this tax if your yearly income is less than the minimal exemption threshold by giving form 15G to your bank. Form 15H is suited for senior citizens.

Eligibility for an RD

  • Anyone can do it.
  • Any minor above the age of ten is entitled to open a recurring deposit account if he or she produces proof of identity.
  • Any minor under the guardianship of a natural or legal guardian who is under the age of ten.
  • Any corporation, firm, sole proprietorship, or commercial enterprise.
  • Any government institution.

Finally…. We have reached the RD Calculator section. Here are the instructions:

  • To use the RD Calculator, open the following google sheets link:RD Calculator
  • Download the Google Sheet file.
  • First enter the RD instalment each month
  • Enter the number of quarters in your tenure. For example: 1 year has 4 quarters. 10 years has 40 quarters.
  • The RD interest has been set at 8%. You can change its value in the cell next to it. However make sure you divide the interest rate by 400. For example, if you want to change the interest rate to 6%, the subsequent value of the RD interest is 6/400.
  • Here you go! The Maturity value is automatically calculated.

The instructions for the RD Calculator are also mentioned in the Google Sheet.

Additional links:

Thank you for reading our blog! We hope this blog was informative. Here are some other blogs/LinkedIn articles for you to check out.

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