1. What is the RD Maturity Formula?

The RD (Recurring Deposit) maturity formula calculates the total amount accumulated at the end of a recurring deposit period, taking into account regular deposits, interest rate, compounding frequency, and time period.

2. How Does the Calculator Work?

The calculator uses the RD maturity formula:

Where:

• \( P \) — Monthly deposit amount ($/month)
• \( r \) — Annual interest rate (decimal)
• \( n \) — Compounding frequency (compounds/year)
• \( t \) — Time period (years)

Explanation: The formula calculates the future value of a series of equal monthly deposits with compound interest.

3. Importance of RD Calculation

Details: Calculating RD maturity helps in financial planning, understanding investment growth, and comparing different investment options for recurring deposits.

4. Using the Calculator

Tips: Enter monthly deposit amount in dollars, annual interest rate as a decimal (e.g., 0.05 for 5%), compounding frequency (typically 12 for monthly), and time period in years.

5. Frequently Asked Questions (FAQ)

Q1: What is a recurring deposit (RD)?
A: A recurring deposit is a type of term deposit where you make regular monthly deposits for a fixed period and earn interest on your savings.

Q2: How is compounding frequency determined?
A: Compounding frequency depends on the financial institution's policy. Common frequencies are quarterly (4), monthly (12), or daily (365).

Q3: Can I withdraw my RD before maturity?
A: Most banks allow premature withdrawal of RDs, but usually with a penalty or reduced interest rate. Check with your specific bank for terms.

Q4: Are RD returns taxable?
A: Yes, interest earned on RDs is taxable as per your income tax slab. TDS may be deducted if interest exceeds certain limits.

Q5: How does RD compare to other investment options?
A: RDs offer safety and guaranteed returns but typically have lower returns than market-linked investments like mutual funds or stocks.