How Recurring Deposits Work - Sahal Tools Guide
A Recurring Deposit (RD) is a financial service offered by banks that allows people to make regular deposits and earn decent returns on their investment. It combines the flexibility of monthly payments with the high-interest rates of a Fixed Deposit.
RD Calculation Formula
The interest on RD is compounded quarterly in most Indian banks. The formula used by the Sahal Tools RD Calculator is:
M = R × [(1+i)^n - 1] / [1 - (1+i)^(-1/3)]
Where M is Maturity Value, R is Monthly Installment, i is Rate of Interest/400, and n is number of quarters.
Why open an RD?
- Discipline: Forces a habit of monthly savings.
- Low Entry: Start with as little as ₹500 per month.
- Safety: Your principal and interest are guaranteed and safe from market volatility.