Recurring deposits or RDs are one of the safest forms of investment, similar to fixed deposits. The only major difference is that in fixed deposits, you would park the entirety of funds at one go. Recurring deposits allow you to deposit smaller amounts through monthly deposits.

RD calculators can help you estimate the returns from a recurring deposit investment, which would help in financial planning.

Learn more about recurring deposit calculators below!

If you are wondering what an RD calculator is, you should know that it is an online tool displaying the exact returns from your chosen recurring deposit investment. Manual calculation of returns can be a time-consuming and hectic process, which this handy online tool can complete in less than a second.

Several banks and financial institutions providing RD facilities also offer such a calculator on their websites. Access any of the RD calculators online to initiate such computations.

You need to enter three specific details regarding your recurring deposit scheme to use the RD deposit calculator. They are –

• Monthly deposit amount – This refers to the sum you have decided to deposit every month in the recurring deposit account. This amount can start from just Rs.100 per month.
• Deposit term – The period you are about to deposit the monthly amounts is the deposit term. RD terms can range between 6 months and 10 years (120 months).
• Interest rate – This one is self-explanatory and refers to the interest rate per year that a particular recurring deposit fund is liable to earn.

After entering these three details, the RD account calculator can compute the interest earnings, along with the total returns that you can expect.

A recurring interest calculator works on the principle of a particular formula. Knowing this recurring deposit formula can also aid individuals in assessing returns manually if such an online tool is inaccessible.

The RD formula relies on three factors, namely, the principal, rate and tenure. Here is the detailed formula – 

A = P x (1+R/N)^(N x t)

The various factors in this formula are –

• A = Maturity amount
• P = Principal or the monthly deposit amount
• R = Interest rate, expressed in percentage
• N = No. of quarters where interest is compounded
• t = Term of investment

An example would help clear out any lingering confusion regarding the same.

Suppose you decide to open a recurring deposit account with a monthly investment of Rs.15,000. The term chosen is 5 years, and the interest rate on offer is 7%. 

From this information, we can gather the following data – 

• P = Rs.15000
• R = 7%
• N = 20
• t = 60 months or 5 years

A = 15000 x (1+7/20)^(20 x 5)

A = Rs.1078993

Interest earned = Rs. (1078993 – 900000) = Rs.178993

Using this formula, RD calculators work as well, ensuring faster calculations. Otherwise, such computations would take significant time to complete manually.

Here is a look at some of the distinct benefits of using such online tools.

RD calculators are highly useful tools for investors, helping them plan their finances effectively. Here are some reasons why you must use such a calculator – 

• Accurate results every time – Recurring deposit calculators follow an algorithm, which ensures zero errors in computation. If you enter the required data correctly, the results displayed by this tool would always be accurate. Manual calculations do not offer such guarantees. In fact, manually using the formula to assess gains is likely to end in inaccurate results.
• A faster method of calculation – Manual calculations would require you to sit with a pen and paper. Even so, it is a time-consuming process. Fortunately, RD calculators are just the opposite. You can arrive at the results instantaneously after clicking on the ‘Calculate’ button. Therefore, such a tool saves time.
• Highly useful during comparisons – Different banks offer varying interest rates on their recurring deposits. As an investor, you should check how much returns you can expect based on such rates. A calculator helps in this pursuit, allowing for a convenient comparison of the different offers to pick the best-suited option.

Essentially, RD calculators are extremely useful tools for the serious investor who wants to plan his finances. These allow you to estimate how much you can earn from your deposits even before starting the investment.

Now that you know about the RD calculator benefits, don’t forget to use one before investing!