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### RD Calculator

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MONTHS
%
Total Interest Earned
Deposited Amount
Total Maturity Amount

If you have invested or are going to invest in Recurring Deposit, then RD Calculator becomes essential for your financial planning. This Calculator provides individuals with a comprehensive understanding of their potential returns, allowing for informed decisions regarding their investment strategies. This tool simplifies the complex calculation and gives RD investors projection of their RD earnings over time. RD calculator needs deposit amount, tenure, and interest rate for the best calculation results.

## What is RD?

RD or Recurring Deposits are an investment tool which allows investors to make regular monthly payments and save money for the long term. Investors can choose the tenure of the deposit and the minimum monthly payment they wish to make according to their convenience. RD schemes are generally more flexible than FD schemes and are generally preferred by those who want to start an account for the purpose of saving money and building a rainy-day fund.

## How to use Clear Tax RD Calculator?

ClearTax Recurring Deposit Calculator is very simple and easy to use. You can follow the below steps to find the maturity amount of your RD:

• Fill the Monthly Amount data
• Select the tenure in Months using slider
• Move the slider and select the Interest Rate
• Your maturity RD amount will be displayed.

You can recalculate your RD maturity amount anytime by changing the inputs.

## How is RD interest calculated?

Interest on RD is compounded quarterly, in most banks. The formula for this is :

M = R[(1+i)^n-1]/(1-(1+i)^(-1/3) )

In this,

M = Maturity Value

R = Monthly Installment

n = Number of quarters

I = Rate of interest/400

So, if you invest in RD and put in Rs. 5,000 per month for a year, at the interest rate of 8%, your total value will be calculated as:

R = 5000
n = 4 (one year has four quarters)
I = 8.00/400

M = Rs. 62, 647 in one year

## Benefits of RD Calculator

• Convenience: Users can easily calculate the maturity amount they will earn based on deposit amount, tenure, and interest rates, facilitating efficient financial planning and goal setting.
• Time-Saving: The calculator eliminates the need to remember complex formulas and perform intricate calculations, saving users valuable time.
• Financial Planning: It aids in planning savings effectively and provides insights into the returns on investments, enabling informed financial decisions.
• Comparison: Investors can compare various RDs' interest rates and choose the most beneficial plan.
• Free to use: The calculator is available online at no cost and can be utilised multiple times for comparison and analysis.

## Tax Benefits on RD

• Similar to other personal tax-saving and investment instruments, Recurring Deposit schemes also attract taxes. A TDS of 10% is deducted on the returns accrued from a RD, if the total interest exceeds Rs. 10,000 in a single financial year.
• Compare this to the SIP scheme and you can see that SIPs are more beneficial for the long term. Since long-term gains from equity are tax free, any SIP which invests in ELSS (Equity Linked Mutual Funds) is also tax free after one year.

## Frequently Asked Questions

Is RD better than FD?

You must decide on your investment in a fixed deposit vs a recurring deposit depending on the amount you want to invest. For instance, if you have a lump sum amount, you can invest in FDs. However, recurring deposits allow you to invest small amounts regularly and accumulate a sizeable corpus with time.

Bank FDs are better than recurring deposits for a lump sum investment. Moreover, you can choose the cumulative FD to earn a higher return in the long run. Recurring deposits are suitable for investors looking to make small deposits over time.

What is the maturity amount in RD?

You get the RD maturity amount at the end of the RD tenure. It depends on the duration and the interest rate of the recurring deposit scheme.

Suppose you have deposited Rs 10,000 per month for ten years in an RD account at an interest rate of 8%. Let’s calculate the RD maturity amount.

M = R[(1+i)^n-1]/(1-(1+i)^(-1/3) )

M = Maturity Value
R = Monthly Installment
n = Number of quarters
I = Rate of interest / 400

R = 10,000
n = 4 x 10
i = 8 / 400 = 0.02

M = 10000 x [((1+0.02)^40)-1]/(1-((1+0.02)^(-1/3)))
M = 18,36,167.13

How much for 5000 per month RD for 5 years?

if you are starting a RD account for 5 years with a monthly contribution of Rs.5000 and the applicable interest rate is 7%, then after 5 years you will receive Rs.3,59,663 as a maturity amount.

How to Calculate RD?

The formula to calculate your Recurring Deposit returns is below:

M = R * [(1 + i)^(n - 1)] / (1 - (1 + i)^(-1/3))

Where,

• M = Maturity value
• R = Monthly Instalment
• N = Number of Quarters (tenure)
• i = Rate of interest/400

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