# What will my RD be worth?

Computes the maturity value of a recurring deposit: a fixed amount saved every month, with interest compounded every quarter.

- Page: https://www.acalculator.org/finance/rd-calculator
- JSON spec: https://www.acalculator.org/finance/rd-calculator.json
- Version: dea0bc903f9e

## Default answer

Example with the default inputs (Deposit each month $5,000.00, Interest rate (per year) 7.5%, For how long? (years) 1): Depositing $5,000.00 a month at 7.5% in a 1-year deposit gives $62,478.46, of which $2,478.46 is interest.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| monthlyDeposit | Deposit each month | The fixed amount paid in at the start of every month. |
| annualInterestRate | Interest rate (per year) | The yearly interest rate the bank quotes, compounded every quarter. |
| timePeriodYears | For how long? (years) | The term of the deposit in years. It is rounded to the nearest whole month. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| maturity | Maturity value | The balance at the end of the term: every deposit plus all interest. |
| paidIn | Total deposited | The monthly deposit times the number of months. |
| interest | Interest earned | The maturity value minus the total deposited. |
| months | Number of deposits | How many monthly deposits are made. |
| gain | Interest as a share of deposits | The interest earned divided by the total deposited, as a percent. It is not a yearly rate. |

## Method

Each deposit grows at (1 + r/400) for every quarter it is held, counting part quarters: M = R[(1 + i)^n − 1] ÷ (1 − (1 + i)^(−1/3)), with i = r/400 and n the number of quarters.

## Assumptions

- Each deposit is paid at the start of its month, and the last one earns one month of interest.
- Interest compounds every quarter, and part quarters earn (1 + r/400)^(months/3), as in the bank formula.
- The term is rounded to the nearest whole month.
- The rate does not change. Tax (TDS) and early-withdrawal penalties are not included.

## Worked examples

1. monthlyDeposit = $5,000.00, annualInterestRate = 7.5%, timePeriodYears = 1 gives maturity = $62,478.46, paidIn = $60,000.00, months = 12. Source: Recurring deposit maturity formula M = R[(1 + i)^n − 1] ÷ (1 − (1 + i)^(−1/3)), i = r/400, n in quarters: ClearTax RD calculator. https://cleartax.in/s/rd-calculator.
2. monthlyDeposit = $1,000.00, annualInterestRate = 7%, timePeriodYears = 5 gives maturity = $71,932.79, interest = $11,932.79. Source: Recurring deposit maturity formula M = R[(1 + i)^n − 1] ÷ (1 − (1 + i)^(−1/3)), i = r/400, n in quarters: ClearTax RD calculator. https://cleartax.in/s/rd-calculator.
3. monthlyDeposit = $10,000.00, annualInterestRate = 5%, timePeriodYears = 0.5 gives maturity = $60,877.43, months = 6. Source: Recurring deposit maturity formula M = R[(1 + i)^n − 1] ÷ (1 − (1 + i)^(−1/3)), i = r/400, n in quarters: ClearTax RD calculator. https://cleartax.in/s/rd-calculator.
4. monthlyDeposit = $5,000.00, annualInterestRate = 0%, timePeriodYears = 1 gives maturity = $60,000.00, interest = $0.00. Source: Recurring deposit maturity formula M = R[(1 + i)^n − 1] ÷ (1 − (1 + i)^(−1/3)), i = r/400, n in quarters: ClearTax RD calculator. https://cleartax.in/s/rd-calculator.

## FAQ

### What is a Recurring Deposit (RD)?

A Recurring Deposit (RD) is a type of term deposit offered by banks and financial institutions where you deposit a fixed amount every month for a predetermined period. It's similar to a Fixed Deposit but allows for monthly contributions instead of a lump sum investment.

### How is RD interest calculated?

RD interest is calculated using compound interest with quarterly compounding. Each monthly deposit grows as A = P × (1 + R/N)^(Nt), where P is the monthly deposit, R is the annual interest rate, N is the compounding frequency (4 for quarterly), and t is the time that deposit stays in the account, in years. The maturity value is the sum over all deposits: M = P × [(1 + i)^n − 1] ÷ (1 − (1 + i)^(−1/3)), where i = R ÷ 400 and n is the number of quarters.

### What are the advantages of RD investments?

RD investments offer several advantages: regular savings habit formation, guaranteed returns, flexible deposit amounts, quarterly interest compounding, and the ability to start with small amounts. They're ideal for individuals who want to save regularly and earn fixed returns.

### Is RD interest taxable?

Yes, RD interest is taxable under income tax laws. The interest earned is added to your total income and taxed according to your income tax slab. Banks also deduct TDS (Tax Deducted at Source) if the interest exceeds certain thresholds. Our recurring deposit calculator shows pre-tax returns.

### Can I withdraw my RD before maturity?

Yes, you can withdraw your RD before maturity, but it may involve penalties. Most banks charge a penalty of 1-2% on the interest earned if you break the RD before completion. Some banks also offer partial withdrawal options.

## Sources

- Recurring deposit maturity formula M = R[(1 + i)^n − 1] ÷ (1 − (1 + i)^(−1/3)), i = r/400, n in quarters: ClearTax RD calculator. https://cleartax.in/s/rd-calculator
- Compound interest with part periods: S. A. Broverman, Mathematics of Investment and Credit, chapter 1.