This calculator provides an estimate. Actual returns may vary based on the bank's compounding frequency and specific terms.
Understanding Recurring Deposits (RD) and How This Calculator Works
A Recurring Deposit (RD) account is a popular savings instrument offered by banks and financial institutions. It allows individuals to deposit a fixed sum of money at regular intervals (usually monthly) over a specified period. RDs are ideal for disciplined savers who want to build wealth gradually while earning a modest interest.
Unlike a lump-sum Fixed Deposit (FD), an RD involves consistent investing, making it a great tool for achieving short-term to medium-term financial goals like saving for a down payment, a vacation, or a large purchase. The interest rate on an RD is usually fixed at the time of opening the account, and it's generally compounded quarterly.
The Math Behind the Maturity Value
The maturity value of a Recurring Deposit is calculated considering the regular deposits, the interest rate, and the duration of the deposit. The formula used by banks typically involves compound interest, but because deposits are made periodically, it's more complex than a simple FD formula. The formula for the maturity value (MV) of an RD is often approximated using the following formula, assuming interest is compounded quarterly:
To simplify for this calculator, we will use an approximation often seen in online calculators which effectively uses the formula for an annuity compounded at the rate of interest, considering quarterly compounding.
The formula implemented here is:
Maturity Value = M * [{(1 + i)^n – 1} / {1 – (1 + i)^(-1/3)}]
Where:
M = Monthly Deposit
i = Rate of interest per quarter = (Annual Interest Rate / 100) / 4
n = Total number of quarters = Duration in Months / 3
Note: This is a common approximation. The exact calculation can vary slightly based on how banks handle partial quarters and exact compounding periods.
How the Calculator Works:
Monthly Deposit Amount: Enter the fixed amount you plan to deposit each month.
Annual Interest Rate (%): Enter the interest rate offered by the bank for the RD.
Duration (Months): Enter the total number of months you intend to keep the deposit active.
The calculator then computes:
Total Amount Invested: The sum of all your monthly deposits over the duration.
Total Interest Earned: The difference between the maturity value and the total amount invested.
Total Amount at Maturity: The final sum you will receive, including your deposits and the earned interest.
When to Use an RD Calculator:
Planning Financial Goals: Estimate how much you'll have for future needs like education, marriage, or a down payment on a property.
Comparing RD Schemes: Evaluate different RD offerings from various banks based on interest rates and tenure.
Assessing Savings Potential: Understand the power of consistent saving and compounding interest.
Budgeting: Determine if the monthly deposit fits within your budget.
By using this RD calculator, you can make informed decisions about your savings strategy and work towards achieving your financial objectives with confidence.
function calculateRD() {
var monthlyDeposit = parseFloat(document.getElementById("monthlyDeposit").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var durationMonths = parseInt(document.getElementById("durationMonths").value);
var maturityValueElement = document.getElementById("maturityValue");
var totalInvestmentElement = document.getElementById("totalInvestment");
var totalInterestEarnedElement = document.getElementById("totalInterestEarned");
// Clear previous results if inputs are invalid
maturityValueElement.textContent = "–";
totalInvestmentElement.textContent = "–";
totalInterestEarnedElement.textContent = "–";
// Validate inputs
if (isNaN(monthlyDeposit) || monthlyDeposit <= 0 ||
isNaN(interestRate) || interestRate <= 0 ||
isNaN(durationMonths) || durationMonths <= 0) {
alert("Please enter valid positive numbers for all fields.");
return;
}
// RD Calculation Logic (approximated for quarterly compounding)
var r = interestRate / 100; // Annual interest rate as decimal
var n = durationMonths; // Total number of months
// Formula for maturity value of RD with quarterly compounding
// MV = M * [{(1 + i)^n – 1} / {1 – (1 + i)^(-1/3)}]
// Where i is rate per quarter and n is the number of months.
// This formula is complex and often approximated. A common approximation for online calculators uses annuity formulas.
// Let's use a more direct approximation often found for RD which considers quarterly compounding.
var i = r / 4; // Interest rate per quarter
var N = durationMonths / 3; // Total number of quarters
var maturityValue;
if (durationMonths < 3) { // If duration is less than 3 months, simple interest might apply or specific bank rules. Approximating with simple interest for less than a full quarter.
maturityValue = monthlyDeposit * durationMonths * (1 + r * (durationMonths / 12));
} else {
// Formula for RD Maturity Value with quarterly compounding (approximation)
// MV = M * [ ( (1 + R/4)^(4*T) – 1 ) / (1 – (1 + R/4)^(-1/3)) ] where T is tenure in years
// Another common approximation, simpler for direct calc:
// MV = M * [ ( (1 + i)^N – 1) / (1 – (1 + i)^(-1/3)) ] where i=r/4, N=num_quarters
// The formula M * [ ( (1+i)^N – 1) / ( (1 – (1+i)^(-1/3)) ) ] is derived for annuities and can be complex.
// A more common and simpler formula used for RD calculators for maturity value is:
// MV = P * [((1 + r/4)^(4*t) – 1) / (1 – (1 + r/4)^(-1/3))] where t is years
// Or, using monthly periodicity:
// MV = M * [ ( (1 + (r/12))^n – 1) / (1 – (1 + (r/12))^(-1)) ] — THIS IS FOR ORDINARY ANNUITY, NOT RD
// Let's use the standard formula as found on many financial sites for RD:
// MV = P * [{(1 + k)^n – 1} / {1 – (1 + k)^(-1/3)}] where k = r/4, n = num_quarters
// Correct formula for RD maturity value with quarterly compounding:
// FV = P * { [ (1 + r/4)^(4*t) – 1 ] / [ 1 – (1 + r/4)^(-1/3) ] }
// Where P is monthly deposit, r is annual rate, t is tenure in years.
// Let's re-implement using t (years) and r (annual rate)
var t = durationMonths / 12.0; // Tenure in years
var ratePerQuarter = r / 4.0;
// Check if the denominator is zero or very close to zero to avoid division by zero
var denominatorTerm = 1 – Math.pow(1 + ratePerQuarter, -1/3);
if (Math.abs(denominatorTerm) < 1e-9) { // Handle near-zero denominator
// Fallback to simple interest calculation if compounding formula fails or is unstable
maturityValue = monthlyDeposit * durationMonths * (1 + r * t);
} else {
maturityValue = monthlyDeposit * ( (Math.pow(1 + ratePerQuarter, 4 * t) – 1) / denominatorTerm );
}
}
var totalInvestment = monthlyDeposit * durationMonths;
var totalInterestEarned = maturityValue – totalInvestment;
// Format currency values nicely (e.g., 2 decimal places)
maturityValueElement.textContent = formatCurrency(maturityValue);
totalInvestmentElement.textContent = formatCurrency(totalInvestment);
totalInterestEarnedElement.textContent = formatCurrency(totalInterestEarned);
}
function formatCurrency(amount) {
// Basic currency formatting, can be enhanced with Intl.NumberFormat for locale-specific formatting
return amount.toFixed(2);
}