What this calculator does
A Recurring Deposit (RD) allows individuals to deposit a fixed sum every month into a bank account and earn guaranteed interest compounded quarterly.
Formula & Mathematical Logic
M = Sum of P × (1 + r/400)^(4 × (n − i + 1)/12) for i = 1 to n
P is monthly instalment, r is annual interest rate %, and n is tenure in months.
How WealthAura calculates this
In Indian commercial banking, each monthly instalment earns interest compounded quarterly based on the exact number of months it remains deposited in the bank.
Worked example
Depositing ₹5,000 per month for 3 years at 7.0% annual interest yields approximately ₹2,00,890 at maturity (₹1,80,000 principal + ₹20,890 interest).
Input sensitivity & what changes
Unlike simple interest models, the quarterly compounding formula used by banks yields noticeably higher returns over medium tenures (3 to 5 years).
How to interpret the result
Evaluates disciplined short-to-medium term savings for near-term financial goals like insurance premiums, travel, or vehicle down payments.
Key factors that influence the outcome
Bank interest rate revisions, senior citizen status, and penalty fees for missed monthly instalments.
Common calculation mistakes to avoid
Missing monthly instalment deadlines (which triggers bank penalties) or expecting market-beating returns from fixed-income instruments.
Underlying assumptions & legal caveats
Quarterly compounding cycle matching RBI master directions for domestic commercial deposits.
Read the related guide →