A recurring deposit is a type of investment instrument which is somewhat similar to fixed deposits in concept. However, unlike fixed deposits where you make a single lump-sum investment, you will need to make recurring periodical investments into a recurring deposit or RD. Most prominent banks and financial institutions provide a recurring deposit facility. Investing into recurring deposits is also an excellent way to inculcate the habit of saving money on a regular basis in the long run. However, understanding how recurring deposit calculations work can be quite complex for a layman to fully grasp. Fortunately, you can use a Recurring Deposit Calculator or RD Calculator online to calculate how much RD interest you can earn on any given investment amount over time.
Since recurring deposits involve a periodical investment of money on a regular basis, and the interest is compounded quarterly, understanding and keeping a tab on the returns of investment can be somewhat difficult. An RD interest calculator uses precise recurring deposit formulas in order to determine the exact amount of money that you can earn as interest depending on how much money you are periodically investing into the RD. This eliminates the need for investors to verify and confirm again whether their returns are accurate. It also allows potential investors to use the calculator to determine how much returns they will get and then decide whether they wish to invest in a recurring deposit.
Using a recurring deposit calculator offers the following advantages to users:
1. The RD calculator can help you effectively plan your future finances and investments if you are potentially considering investing in a recurring deposit.
2. The RD calculator is extremely easy to and helps save investors and potential investors a lot of time when determining their returns on recurring deposits.
3. The RD calculator is 100% accurate since it works on a precise formula and the calculations are digitally leaving no room for error.
The following is used by an RD calculator when determining the RD returns, which involves multiple variables:
A = P*(1+R/N)^(Nt)
In this formula,
A = Maturity amount at the end of the RD
P = The amount that will be invested into the RD each month
N = Compounding frequency (of No. of quarters)
R = Rate of interest
t= Time period/tenure
This is the universal formula which is used in the calculation of recurring deposit maturity. You can calculate the RD maturity of any amount at any interest rate for any tenure by adjusting the variables involved.
Just follow these simple instructions to get your final RD maturity amount using the RD calculator:
Step 1: Enter the amount of money that you would be investing on a recurring or periodical basis.
Step 2: Enter the rate of interest offered by the bank/financial institution.
Step 3: Enter the tenure of the RD, i.e. the number years the RD will be active
The RD calculator will accurately show you the exact amount of money you will receive at the time of maturity.
