RD stands for recurring deposits, and they are very popular as you can earn interest by investing money into that account. The amount can be small or large, but the interest you gain will depend on how much you choose to invest. But unlike FD, where you deposit a lump sum amount, here you will have to deposit every month.
This is more appropriate for earning individuals who prefer to invest some part of their salary to their RD account and thereby earn interest on their investment. This not only allows an individual to do savings but also instills great discipline. But how much interest will you earn? Is the interest even worth it? This is where the RD calculator comes in.
RD Calculator allows you to quickly determine how much return on investments you will receive and the total amount you will receive at the end of the scheme. RD calculators will really come in handy for new investors who are inexperienced in the financial world. Let’s take a moment to understand a few basics of the RD calculator.
What is an RD Calculator?
An RD calculator is used to help an individual find out how much interest or, in other words, how much return on investment they will receive. It also calculates the total amount you will receive at the end of the scheme’s maturity. All one needs to do is input some variables such as the amount of money you will deposit monthly, the total duration of investment, and the interest rate, and you will get your desired information.Â
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How Does It Work?
The recurring deposit calculator works the same way as other calculators do. It uses the formula A = P*(1+R/N)^(Nt) to calculate the interest you will receive at the end of your RDs tenure. You would have to use the same formula if you choose to do it manually, but with an RD calculator, it’s so much simpler and free from errors.
Also, doing the calculations yourself may take a whole lot of time, while an RD calculator does it almost instantaneously. As of now, you will receive a rate of interest of about 6.7 – 7.6% or more, depending on the deposit amount and the scheme’s tenure. However, the interest rate is not final, and it ultimately depends on the government of India that regulates it.
How to Use RD Calculator Online?
You will have to input some values to use the RD calculator online. Follow these steps-
- Step 1
In the first step, you will have to input the amount of money you will deposit every month.
- Step 2
Enter the number of years or the tenure for your RD scheme. It is the total period for which you will deposit money every year.
- Step 3
If you are using the Recurring Deposit calculator of any specific bank, then the interest rate will be given already. But if you use a 3rd party RD calculator, you will have to enter the rate of interest manually. Usually, it’s around the ballpark of 6.7 – 7.5%, depending on the tenure and the amount of money you choose to invest.
- Step 4
Now, find the ‘Calculate’ button and click on it. It will display the amount of interest you will receive and the total amount of money you will receive at the end of the scheme’s tenure.
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Advantages of Using RD Calculator
- It’s an essential tool that saves a lot of time you would have to spend calculating it yourself. But with an online RD calculator, you can get the same information in 1 or 2 minutes. Most importantly, the result will be 100% error-free, which can’t always be said for manual calculations.
- You can enter variations of the input data to get multiple results, which you can later use to analyze and decide which plan you should go for.
- The RD calculator can be accessed from any device, including your smartphone, making it a viable tool. Also, this calculator is free, and you can use it as many times as you want.
Various government-regulated or private banks have their version of the RD calculator. But if you want, you can also use a 3rd party calculator. No matter which calculator you choose, they are all straightforward, easy to use, and do the calculation in a matter of seconds.
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