A recurring deposit is perhaps the simplest investment vehicle that is immensely popular in India. It is ubiquitously used by salaried professionals as it does not require investors to invest large amounts of money in one go. And, using the best Recurring Deposit Calculator can help investors figure out how much money they will get on maturity.
Understanding Recurring Deposit
Before looking for the best RD calculator, it is important you understand what is a recurring deposit and how it can help you create wealth without taking risks.
Every bank in India has a fix minimum amount that investors can invest each month, when it comes to recurring deposit investment schemes. This fixed amount attracts a fixed interest rate until it reaches maturity. Thereafter, customers receive the amount deposited along with the interest paid on the amount.
This investment vehicle can be extremely beneficial if you don’t have large sums of money to invest, but still want to invest a fixed amount to earn guaranteed returns. Above all, it will give you peace of mind knowing that your investment will be safe and there is no risk of losing it, unlike the stock market.
Typically, the tenure for recurring deposits is available in multiples of three months and interest in calculated annually. However, the interest is compounded each quarter and not on a monthly basis, as many investors believe. You can prevent miscalculations and errors by using a proficient and accurate RD calculator so that you get the right picture of your investment
Using the Best RD Calculator
An RD calculator allows you to calculate the amount your recurring deposit will reap when it reach maturity. The calculator makes use of a simple formula, wherein you need to provide the interest rate and the deposit amount. However, when you are using an RD calculator, there are a few things that you should keep in mind.
- Make sure you treat each month’s deposit as a separate investment
- Each month will attract a different interest rate based on the amount you invest
- Compounding of the interest will occur at the end of each quarter; until then your deposit will attract simple interest
- The amount that you will receive at maturity will be the interest + deposit for each month
You will be able to find a good RD calculator online. Most banks offer this calculator for prospective investors. Banks like State Bank of India, Axis Bank, HDFC and ICICI Bank allow customers to use the RD calculator available on their website. Instead of trying to do the maths yourself and getting confused between simple and compound interest, this online RD calculator will do the hard work for you and offer accurate result.
The best online RD calculator typically will ask for the following information:
- Amount deposited
- Duration of the investment in months
- Opening date of recurring deposit
- Closing date of recurring deposit
- Whether the investor is a senior citizen or not
- Interest rate. However, if you using your bank’s RD calculator, the interest rate will be already fed into the online RD calculator
Using recurring deposits and the best RD calculator on the Internet, you can ease plan your short-term financial goals – vacation, down payment for a home, upcoming marriage, expenses related to higher education and home renovation.
Recurring deposits offer consistent returns over a period of time and unlike equity-based investment vehicles, you can expect guaranteed returns over short-term. So, use an RD calculator online from a reliable site to ensure you get the returns on your investment without any risk.