RD Calculator: How to Build Wealth with Monthly Recurring Deposits

A Recurring Deposit (RD) is one of the most popular savings instruments in India, especially for salaried individuals. It allows you to save a fixed amount every month while earning interest similar to a Fixed Deposit. It's the perfect middle ground between the discipline of a SIP and the security of an FD.

The Power of Monthly Compounding

In an RD, interest is typically compounded quarterly. This means you earn interest not just on your principal, but also on the interest earned in previous quarters. Over a 5-year tenure, this can significantly boost your final maturity amount.

RD vs. SIP: Which is better?

While both involve monthly contributions, RDs offer guaranteed returns with zero market risk. SIPs are market-linked and can offer higher returns but with higher volatility. For short-term goals (1-3 years), an RD is often the safer choice.

RD Interest Taxation

Remember that RD interest is fully taxable as per your income tax slab. Banks deduct TDS if the interest earned across all your branches exceeds ₹40,000 (₹50,000 for senior citizens) in a financial year.

Bottom Line: Start an RD today to automate your savings and reach your short-term financial targets with peace of mind.