RD Calculator
A Surprising Story: The Vacation Fund That Grew Itself
Priya and Sameer wanted to go on a European vacation in three years but found it hard to save a large amount. Instead of aiming for a big lumpsum, they started a small Recurring Deposit (RD) of ₹8,000 per month. To them, it felt like a small, manageable expense.
Over the next three years, they almost forgot about the automatic deductions. When the RD matured, they were pleasantly surprised. Not only had they saved ₹2,88,000, but the interest had added a significant extra amount, enough to cover their visa fees and some shopping. They realized that the RD didn't just help them save; it forced a discipline that made their dream possible without feeling a financial pinch. The calculator had shown them a potential number, but the real surprise was how effortlessly they reached their goal by turning a large, intimidating target into small, achievable monthly steps.
How can an RD calculator help you?
An RD calculator is a simple yet effective tool for anyone who wants to save systematically. It helps you:
- Determine the exact maturity amount you will receive for your monthly investments.
- Plan for short-term financial goals like a vacation, a down payment, or buying a new gadget.
- Compare interest rates from different banks and post offices to choose the best option.
- Understand the power of disciplined monthly savings and compound interest.
The formula to determine RD maturity amount
The maturity amount for a Recurring Deposit is calculated using the following formula:
M = R * [(1+i)^n - 1] / (1-(1+i)^(-1/3))
Where: M = Maturity Value, R = Monthly Installment, n = Number of quarters, and i = Rate of interest (per quarter).
How to use RD calculator?
Using the calculator is easy. Simply adjust the sliders for:
- Monthly Investment: The amount you wish to save each month.
- Rate of Interest: The annual interest rate for the RD.
- Time Period: The duration of the RD in years or months.
The calculator will instantly show the total investment, interest earned, and maturity value.
Advantages of using RD calculator India
- Provides instant and accurate results, saving you from manual calculation.
- Helps in comparing different RD schemes.
- Aids in disciplined financial planning for your goals.
- It's completely free and can be used multiple times to find the ideal investment plan.
FAQs
What is a Recurring Deposit (RD)?
A Recurring Deposit is a special kind of term deposit offered by Indian banks which helps people with regular incomes to deposit a fixed amount every month into their RD account and earn interest at the rate applicable to Fixed Deposits.
Is the interest on RD taxable?
Yes, the interest earned on a Recurring Deposit is taxable as per your income tax slab. Banks will also deduct TDS (Tax Deducted at Source) if the interest income from all your deposits with them exceeds ₹40,000 in a financial year (₹50,000 for senior citizens).
Can I change the monthly installment amount?
No, the monthly installment amount is fixed at the time of opening the RD account and cannot be changed during the tenure.