Recurring Deposit (RD) is an investment option looked at by investors keen on starting small with their savings. With RD, one can make small contributions at regular intervals and get returns on one’s savings. Hence, investing in an RD means one can opt to invest in instalments rather than putting a lump sum. It is one of the low-risk options, with higher returns, as compared to a savings account. RD works almost like an FD but comes with fairly high flexibility.
However, before putting your money in an RD, it is important to know which combination of instalment, rate of interest and deposit tenure will get you better returns. To do that, you can use RD calculators, which are targeted exactly for that. Recurring Deposit calculators can be used to plan one’s investment better. With online RD calculator, investors can learn about interest rates and the sum he/she gains for his/her savings.
Here is how you can use the RD calculator of HDFC Bank, for instance, to find out what you will gain by investing in a Recurring Deposit:
Using RD calculator: Log in to the HDFC’s official website, to use the HDFC RD calculator. Put in the amount that you want to save every month in your RD account. Next, choose the tenure of your savings, the period for which you want your money to be invested. Senior citizens get a slightly higher return. Hence you also have to identify if you are one. After keying in all the information, click on the ‘calculate’. The next page will show you how much interest you will be able to earn on maturity, from your investment.
Calculation of Recurring Deposits maturity amount: In case of an RD, the maturity amount the investor receives at end of the tenure is the sum of the principal amount and the interest earned over the investment period, wherein the interest is compounded quarterly. The calculation of the maturity amount can be a little complex, for which you can use RD calculators to find out your Recurring Deposit maturity amount. The calculator will auto-generate your maturity amount, once you key in your details.
Minimum and maximum tenures: The bank offers a host of tenure options for its customers, who want to invest in a Recurring Deposit account. Investors can choose from a range of tenures starting from 6 months to up to 10 years. However, for NRIs, the minimum tenure is 12 months.
Minimum monthly instalment amount: Some banks have set a minimum monthly instalment amount needed to invest in their bank RDs. For instance, HDFC Bank lets its customer choose the principal for his/her RD account, irrespective of his/her income. One can start with an investment of Rs 1,000 and in multiples of Rs 100 after that, to a maximum of Rs 1,99,99,900 a month, in a Recurring Deposit account.
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Source: Financial Express