RD Calculator: The Features and Benefits you Need to Know to Get Started
If you are looking to accumulate funds, be it for your child’s education, marriage or vacation, you can definitely consider opening a Recurring Deposit (RD) account.
Being one of the safest investment options a bank offers, RD continues to be the most trusted investment product generation after generation. What do you think has added to the popularity of RD accounts, mainly among the youngsters?
An RD calculator, among many other reasons. Read to know these reasons:
Reasons Why Young People Prefer RD:
- Inculcates the Habit of Saving:
Operating an RD requires the discipline of crediting a specific amount every month into the scheme. The habit of keeping money aside to deposit in the account to use in the future builds a certain obligation to save and manage the finances better.
- Low Investment Option:
You can open an RD with a sum as low as ₹500. So, the young population that has just started their careers can easily afford to begin by investing a small amount monthly. Investing a lump sum, as in the case of a Fixed Deposit, may not be possible for them.
- Low-Risk Investment: An investment in a Recurring Deposit account is almost fool proof. It means your investment is safe from market risks, unlike mutual funds and stocks.
- RD Calculator for Decision-Making:
An RD calculator is an online tool that simplifies and expedites return rate calculations. Having clarity on what to expect as maturity benefit motivates people to invest in an RD.
Features of a Recurring Deposit:
- The interest rate offered is more than that on the savings account. Senior citizens benefit from an even higher interest rate.
- Pre-mature withdrawals are not allowed. They may be permitted in some cases but with a penalty.
- RD is collateral, so you can take a loan on it. You can get 80-90% of your deposit as a loan.
- You can choose the option of automatic credit. It means your RD amount can be regularly deducted without needing any reminder.
How Does One Operate an RD Account?
Opening an RD is much more convenient because you don’t need a fund manager. Once you are satisfied with the return you get on your deposit (post RD calculation), you may open your deposit account to kickstart your savings journey.
The interest rate, tenure, and monthly investment amount are well-known before the commencement of the account. The information mentioned above is available on the bank’s website. You may also contact your bank to double-check the details.
Your chosen banks will also have their RD calculators that will have a variety of additional features.
Why Use a Recurring Deposit Calculator?
To start, let us clearly understand what an RD calculator is. It’s an online tool that computes the maturity benefit you will receive at the end of your pre-determined tenure. Since the RD amount grows by a particular interest rate, you benefit by receiving a higher amount at the end of your RD duration.
RD Tenure: It may vary from one bank to another and ranges between 6 months to 10 years.
RD Interest Rate: The interest rate offered will be 5 to 8% for most deposits. This rate changes with tenure. For example, if your investment grows by 5% for an RD account for six months, you may avail of the benefit of 5.5% or more if you open the Recurring Deposit account for a year or more.
Benefits of Using RD Calculator
Use it Multiple Times: There is no cap on the number of times you can compute your maturity benefit on the calculator. Check the cash value you can avail of after feeding in various variables like interest rate, duration, and others.
Tool for Comparison: Using an RD calculator, you can compare the return rate you receive from different banks. Choose the bank that offers the maximum benefit on your desired investment amount and tenure.
Accuracy: The calculator shows you the exact amount you will receive at your RD maturity. However, you must ensure that you have keyed in the right information.
Saves Time: It’s a quick tool and furnishes the result in seconds. The depositors don’t have to spend time doing the calculations manually. The tool comes in handy when you need to carry out complex calculations.
There can be multiple factors that may influence your decision to open an RD account. Some of them may be RBI guidelines, inflation, duration, the urgency of financial support, and many others.
So, while the final decision of starting the deposit is yours, know that you will never regret investing money in something which is as safer as an RD scheme.