1. What is the Recurring Deposit Formula?

The Recurring Deposit (RD) formula calculates the maturity amount for fixed monthly deposits with compound interest. It's a popular savings instrument that helps individuals build savings through regular contributions.

2. How Does the Calculator Work?

The calculator uses the RD formula:

Where:

• \( M \) — Maturity amount (currency units)
• \( P \) — Monthly deposit amount (currency units)
• \( N \) — Number of months (unitless)
• \( R \) — Annual interest rate (%)

Explanation: The formula calculates the total principal amount plus the compound interest earned on recurring deposits over the specified period.

3. Importance of RD Calculation

Details: Accurate RD calculation helps individuals plan their savings, understand potential returns, and make informed financial decisions about recurring deposit investments.

4. Using the Calculator

Tips: Enter monthly deposit amount in currency units, number of months (must be at least 1), and annual interest rate in percentage. All values must be valid positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How is RD different from fixed deposit?
A: RD involves regular monthly deposits while fixed deposit requires a lump sum investment. RD helps in systematic savings over time.

Q2: Is the interest compounded monthly in RD?
A: Yes, most recurring deposits compound interest quarterly or monthly, which is accounted for in this formula.

Q3: What are the tax implications of RD?
A: Interest earned on RD is taxable as per your income tax slab. TDS may be deducted if interest exceeds specified limits.

Q4: Can I withdraw RD prematurely?
A: Most banks allow premature withdrawal of RD, but penalties may apply and interest calculation may differ.

Q5: How accurate is this calculator?
A: This calculator provides a close approximation. Actual returns may vary slightly based on specific bank policies and compounding frequency.