Recurring Deposit (RD) – Maturity calculator. Recurring Deposit (RD) is a special type of deposit scheme offered by Post Office and Banks, where a fixed amount is deposited every month for a fixed period and deposit amount along with compounded interest can be obtained at the time of maturity. Generally, interest is compounded on a quarterly basis. This article is intended to help you to understand everything you need to know about recurring deposits.
Recurring Deposit (RD) – Maturity value and Interest Calculator
Maturity value and calculation of recurring deposit (RD) is really complex as the interest rate is generally compounded on a quarterly basis. RD – Maturity value and Interest calculator provides an easy online solution by helping you to calculate the Maturity value and Interest rates of RD deposits for any duration amount and interest rate. Even though RD schemes generally compound on a quarterly basis, yearly, half-yearly and monthly compounding can also be done on this calculator.
Recurring Deposit – How is interest and maturity amount calculated?
Let us have a look at the compound interest calculation first.
A formula for calculating annual compound interest is
- A = final amount
- P = principal amount (initial investment)
- r = annual nominal interest rate (as a decimal, not in percentage)
- n = number of times the interest is compounded per year
- t = number of years
Recurring deposit or RD is paid monthly but it is compounded quarterly. So in order to find the total maturity value in RD, we should calculate the final value for each installment separately and then add them all to get the final result.
Special Formula for Quarterly compounding Recurring Deposit maturity value calculation
Alternatively, you can use a special formula to calculate the RD maturity value in a single step.
M = ( R x [(1+r)n – 1 ] ) / (1-(1+r)-1/3)
Where, M = Maturity value,R = Monthly Installment, r = Rate of Interest (i) / 400 and n = Number of Quarters.
Although this formula seems to be complex you can easily calculate the maturity value of your recurring deposit for any tenure and interest rates using the Online – RD Calculator provided at the top of this page.
Recurring Deposits – main advantages
- High Security: Investing RD involves 0 % risk and hence is very secure.
- Create investment Corpus: RDs can help you to create a fund from small savings.
- Good Interest rates: Interest rates offered by RDs are comparable with fixed deposits rates.
- Advantageous to Senior citizens: Special interest rates may be available for senior citizens
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