Investment instruments that resemble fixed deposits are known as recurring deposits. The main distinction between fixed deposits and recurring deposits, is that recurring deposits let you invest regular amounts at intervals instead of a lump sum at one time. If you invest in an RD, you get into the habit of regular and disciplined saving and investment. These deposits are especially suited to individuals who are earning a regular income, such as a salary. When you sign up for an RD, you may want to estimate the potential returns you will get. This can be facilitated by a simple online tool, the RD calculator.
In the current age we live in, there are a plethora of ways for you to invest your capital. In fact, you can make your financial portfolio truly diverse with some fixed income instruments like RDs, and some other avenues like stocks. If you want to invest in stocks, you will have to open a demat account, but with a recurring deposit, you can just start this investment with your own bank account. Any investor, especially a novice, may find it challenging to conduct recurring deposit return calculations, and in this respect, an RD calculator aids investors in figuring out returns.
As the name suggests, a recurring deposit is a continuing form of investment. For many investors, the returns on investment may prove difficult to monitor. With a recurring deposit, the interest generated is compounded on a quarterly basis. Moreover, there are many variables that may be involved, making calculations a tad complicated. Taking RD interest rates into consideration, an RD calculator gets rid of the trouble of you doing manual calculations, enabling you, the investor, to get to know exact amounts your deposits could accrue within a specific time span.
The only manual calculation that has to be done by the investor is the deduction of TDS. According to the latest Reserve Bank of India regulations, recurring deposits are liable for a deduction of TDS. Nonetheless, this calculation is not something that is standardised and may vary from financial institution to financial institution. This is why an RD calculator may not take this calculation into account. Besides this, there are some pros to using an RD calculator:
Why invest in a recurring deposit? You can just invest in any upcoming IPO instead. The reason to invest in a recurring deposit and other instruments to diversify your portfolio. You can use the RD calculator online to compute returns in the following way:
Nowadays, online investment is easy, whatever vehicle you choose. Even easier is the way you can use online tools such as the RD calculator. You may think of an array of investment channels to diversify your investment portfolio. For instance, if you wish to invest in stocks, you will have to open a demat account. Another way to invest in stocks is to go in for any upcoming IPO subscription. With portfolio diversification, you can minimise risk, and potentially maximise returns.
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