Recurring Deposits (RD) are a way to save money regularly. You deposit a fixed amount every month for a set period, and at the end, you get back your savings along with some interest. It's a simple and disciplined way to grow your savings over time.
RD (Recurring Deposit) calculator is a simple online tool designed to help you estimate the maturity amount of your recurring deposit investment. It takes into account factors such as the monthly deposit amount, tenure (how long you plan to save), and the interest rate offered by the bank. With this information, the calculator provides an approximation of the total amount you'll receive at the end of the investment period, including both your principal amount and the interest earned.
The interest on a Recurring Deposit (RD) is typically calculated using the formula for compound interest. The formula is:
A = P*(1+r/n)^(nt)
Where:
A = Maturity amount (the total amount you'll receive at the end).
P = Monthly deposit amount.
r = Rate of interest per compounding period.
n = Number of compounding periods per year.
t = Tenure of the RD in years.
Suppose you invest in a Recurring Deposit with the following details:
P= 5,000 Annual interest rate
r= 6% Compounding frequency
n= 12 times a year (monthly compounding)
t= 2 years
A = P*(1+r/n)^(nt)
Calculate the monthly interest rate (r/n):
r/n = 0.06/12= 0.005
Calculate the compounding factor:
(1+R/N)^(Nt) = 1.1236
Calculate the maturity amount for one instalment:
5,000×1.1236 = 5,618
Total number of months (nt) to get the total maturity amount:
5,618×24 = 1, 34,832
So, at the end of 2 years, with a monthly deposit of ₹5,000 and a 6% annual interest rate compounded monthly, you would receive approximately ₹1, 34,832, including both your principal and the interest earned.
