Advantages of Using an Online RD Calculator

## What is an RD Calculator?

A recurring deposit (RD) is a type of savings instrument that helps with your future planning. People can consistently save a small amount with monthly contributions for a defined period and earn interest on those deposits with an RD savings account.

The lump sum payment and the interest are paid after the RD deposit reaches its maturity. As the interest rate is fixed for the duration of the RD, calculating potential earnings from investing in one is simple. It remains constant, in contrast to many other investment products, making it a desirable savings plan.

Like any other type of savings account, the interest rate on RDs varies from bank to bank. For various periods, interest rates in Indian banks range from 3.5% to 8.5%. Seniors citizens’ RD accounts have an interest rate that is a little higher than those of normal accounts. Banks usually provide senior citizens higher interest rates, 0.5% more than that of general citizens.

The recurring deposit interest is compounded four times every year. An RD account can be opened by any person, HUF, corporation, firm, NRI, government agency, minor over the age of 10, and minor under the supervision of a legal guardian.

The majority of banks also provide Flexi recurring deposit accounts. Depending on their convenience, the investor in this can invest a variable amount of money at regular intervals. The depositor may choose a core amount from the bank to serve as the foundational investment for each interval. In addition, the depositor may invest in multiples of the core amount for each interval.

## Features of Recurring Deposit

RDs instill a consistent saving habit.

You can start an RD with just Rs 10 as the minimum amount. Depending on the bank, this may change.

An RD might work for varying periods, from six months to ten years.

The interest rate on a recurring deposit is higher than that of a savings account.

For RDs, premature withdrawals are not permitted. However, banks do occasionally allow early withdrawals with a fee.

You can use the deposit as collateral for a loan and receive 80–90% of the deposit value as a loan.

An RD can be funded regularly by instructing the bank to credit the RD account automatically from your savings or current bank account.

## Investment Benefits of Recurring Deposits

Recurring deposits provide returns, making them an appealing investment option. Apart from this, it has the following advantages:

RD is an investment product that is simple to grasp for new investors. By investing in a recurring deposit, one can develop the habit of investing and saving regularly.

RD can be used as a short, medium, or long-term investment tool. The minimum tenure is six months. In addition, in some institutions, the minimum investment amount is usually Rs 10. However, it is typically INR 100 in public sector banks and INR 500 – INR 1000 in private banks.

Recurring deposits help you with liquidity. You can withdraw funds from an RD account, but the bank will charge you a modest fee.

You can seek a loan, such as a personal loan or an education loan, against your RD account and receive 80–90% of the deposit amount.

## Advantages of Online RD Interest Calculator

Recurring Deposits (RDs) are investment vehicles that need regular monthly fixed deposits for a set period in exchange for an interest rate. When an RD matures, the investor receives a lump sum amount plus interest.

They are comparable to fixed deposits. The difference is that RDs require continuous investment. Calculating the interest on recurring deposits can be time-consuming and difficult. There are many recurring deposit calculators online, which can be used by anyone. They have the following advantages.

### Simple to use

The recurring deposit calculator is incredibly simple to use. All that is required is to enter the figures for the monthly deposit, the RD interest rate, the number of years of investment, and the compounding frequency. Then, the recurring deposit calculator calculates the maturity amount.

### Time-saving

Using an RD calculator can help investors save time. It can execute complex calculations in seconds. It saves the investor the effort of performing laborious computations.

### Accuracy

If the inputs are entered correctly, the calculator is entirely accurate, and there is no danger of error.

### Comparison

Many banks and financial institutions provide recurring deposits. Investors can quickly compare the maturity values of recurring deposits from different financial institutions using an RD calculator.

## How to Use the RD Calculator?

Calculations for recurring deposits can be simplified by using a calculator. Investors must follow the following procedure to use the RD maturity calculator.

- Enter the investors’ desired monthly investment amount.
- The investment term is then entered. Most banks compound the interest quarterly. Hence, enter the investment period in quarters.
- The final step is to insert the RD’s interest rate.

The original investment, wealth gained, and the total maturity amount formed will be returned by the RD maturity calculator in both quantitative and graphical versions.

The original investment represents the sum of the investor’s monthly deposits over the investment period. The return the investor earns over the investment’s tenure is the wealth gained. The maturity amount is the amount that will be credited to the investor’s bank account after the period as the RD’s maturity value.

#### You can calculate the maturity value of your recurring deposit by the following formula.

M = R[(1+i)^n-1]/(1-(1+i)^(-⅓))

In this formula,

The maturity value is represented by M.

The monthly installment amount is represented by R.

The number of quarters or the number of compounding periods is indicated by n.

The rate of interest is indicated by i. As we have four compounding periods and i should be entered in its decimal form, i = interest rate/400.

Consider this example. You have invested in a recurring deposit with a monthly installment of INR5,000. You deposit money for one year and the rate of interest is 8%.

R = 5000; n = 4 (as there are four quarters in one year); i = 8/400 = 0.02

By using the formula given above, the maturity value at the end of one year will INR 62,647.

There are many online RD calculators, such as the SBI RD calculator, that allow you to easily calculate the maturity value of your recurring deposit.

## Other Investment Alternatives

To expand your portfolio, it is always a good idea to consider various investment alternatives. Thus, your risk is reduced, and your rewards are maximized. You can make investments in safer options like fixed deposits and government bonds. Consider investing in stocks if you have a high-risk tolerance. One of the investing opportunities made possible by technology, which has been expanding quickly, is P2P lending. The product is non-market linked, so you don’t have to worry about the volatility. The Fractional Matchmaking Peer-to-Peer Plan from LenDenClub offers annual returns of up to 10–12%* per annum which is higher than what FDs or bonds can generate. Thus, it allows high positive real returns, allowing you to beat the impact of inflation in the economy.