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Recurring Deposit Interest Rates Calculator

Shreya has been working in the private sector since the past quite a long time with a good salary. But no matter how hard she tried, she couldn’t have any savings. She was someone who had an educational loan on her, plus her parents were told, and hence there was a flow of medical bills. 

Concerned, Shreya finally talked to her colleagues, and there she found out about investment and tax planning tools and one of which was a recurring deposit account or (RD). She also found out that with RD, she can make regular deposits and can earn decent returns on the investment. That’s when Shreya decided that this was exactly what she was looking for and went for it.

What is Investment and Tax Planning?

Investment and tax planning is analyzing the financial situation to ensure that all the elements of finance, which include investment, saving, earning, and tax, work together. This is a very integral part of an investor’s financial planning because this plan minimizes how much to pay in taxes and how much to invest.

Investment and tax planning take care of several considerations, which include income, size, time of purchase, and plan for other expenditures. There are many tools via which one can plan their investment and tax like PPF, Equity-linked saving schemes, life insurance, health insurance, and so on. One such tool is Recurring Deposit.

What is a Recurring deposit?

A recurring deposit is a term deposit offered by Indian Bank, which allows investors to make regular deposits and earn a return on investment. It is a flexible and easy investment because of its regular deposit and interest component features.

A recurring deposit is a consummate saving and investment instrument because it allows account holders to invest a fixed amount each month along with earning decent interest. But calculating recurring deposits can be complicated for an average investor, and hence RD calculator is extremely beneficial for an average investor.

Recurring deposit interest rate calculator

A recurring deposit is a type of deposit that takes place every month, and hence tracking the return on this investment can be a task for the investors. 

Since interest is a quarterly component and involves multiple variables, therefore, RD interest rate calculator removes the inconvenience of figuring out the returns manually and helps the investors know the exact deposit.

RD calculator is one of the best interest rate calculators because of the following reasons:

  • A recurring deposit calculator is time-saving and convenient for investors.
  • It provides clarity to the investors, and it gives the exact amount of return on investment, which helps the investors to plan their future.
  • The estimates of RD interest rates are accurate and advisable for financial planning.

 

RD interest rates calculation

The formula of RD interest rate amount is A=P* (1+R/N) ^ (NT) where,

A= Maturity amount

R= RD interest rate in %

P= RD instalment each month

N= compounding frequency 

T= tenure

To calculate RD interest rates, this is the formula that is used regardless of the tenure or the amount invested.

ADVANTAGES OF USING RECURRING DEPOSIT CALCULATOR

There are many advantages for the investors using RD calculators, but there are some major advantages which include.

  • Interest rate calculation using RD calculator takes seconds, and the entire process takes less than 2 minutes and therefore, it is an effective as well as efficient instrument.
  • RD calculators are available for free, and an investor can use them as many times as they wish to and can also put over one variable in ‘n’ number of variations.
  • There is no scope of ambiguity if all the variables used are correct.

 

Disadvantages of RD calculator:

The only thing that can be an area of concern for the investors with the RD calculator is that the TDS Deduction is to be done manually. This is because of diversity in implementing TDS Deduction among different financial institutions. 

Conclusion

A recurring deposit is a financial tool that holds the potential of high return and is considered a stable financial instrument. This investment instrument is very similar to fixed deposits. But in recurring deposits, one needs to make fixed monthly deposits, which creates a discipline for making regular investments among the earning people.

This also inculcates the habit of savings among the younger generation to meet the investment amount on a monthly basis. The financial institutions and banks in India are offering Recurring Deposits because of their benefits and a wide variety of demands.

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