A Recurring Deposit Calculator helps you to calculate your return based on your regular fixed deposit. Using this calculator, you can calculate your expected return based on your series of regular, smaller deposits rather than an FD (lump sum) by following the compound interest principle. In this scheme, the deposits are made monthly for a specific period (years).
What is Recurring Deposit ?
A recurring deposit (RD) is a type of term deposit offered by Banks and Financial Institutions that allows you to invest a fixed amount of money at regular or pre-determined frequency/ intervals. Either dialy, weekly or monthly for a fixed tenure with a fixed interest rate.
It’s the modern and flexible savings tool that combines the flexibility of small and regular contributions to the savings goal with a higher and fixed interest rate, which is competitive with the regular FD Interest rate. This RD seems to be the best savings goal for regular income holders and salaried personal. Also, for them it isis the best and better than lump sum-based regular FD as RD also provides a higher interest rate.
Recurring Deposit Calculator
🗓️ Recurring Deposit (RD) Calculator
How a Recurring Deposit Works
Recurring Deposit promotes the savings habit. It's the discipline of saving and is ideal for those individuals who have a regular monthly income. For those who want to build a sustainable corpus for a financial goal over a period, it's one of the best financial plans that gives better returns over time. It's just like an Investment made in SIP, but SIP is a mutual fund, and RD is your money saved in BFIs.
- Fixed Monthly Instalment (EMI): At the time of opening an RD account, you commit to depositing a specific, fixed amount every month (e.g., NPR 5,000). This amount cannot be changed during the tenure. You can open it only after having a regular/ normal savings account in your bank.
- Fixed Tenure: You choose a fixed period for the deposit, which typically ranges from 1 year to 5 years. The tenure is usually selected in multiples of three months. The higher the period higher your return will be.
- Fixed Interest Rate: The interest rate is locked in at the time of opening the RD account and remains constant throughout the entire tenure, regardless of any future market rate changes. It provides assured returns.
- Quarterly Compounding: The interest on the deposit is usually compounded quarterly. This means the interest earned is added back to your principal every three months, allowing you to earn interest on your interest, leading to faster growth. That shows the power of compounding.
- Maturity: On the maturity date, you receive a lump sum payment consisting of the total principal amount deposited over the tenure plus the total accumulated interest.
How to use Recurring Deposit Calculator
It's easy to use and calculate your return on your monthly investment by using this RD Calculator. Here are the steps to be followed,
- Set your monthly investment and enter it in Monthly Deposit, like 5000 per month,
- Enter the interest rate set by your bank for this RD Savings, like 6.5% p.a.
- Set the duration type to Years; it's recommended.
- Now enter the no. of years in Duration, it's recommended to set for higher years for best returns.
- Tap/ Click on Calculate Maturity. That's it.