If you are to count the number of expenses you would have to incur in the coming years, we bet the list would be very long. Managing all these expenses through a single paycheque can get challenging. This is why it is suggested that you invest in a savings scheme.
Not only do savings schemes channel your investment systematically and build a healthy savings habit, but they also help multiply your money to increase your wealth.
One such savings scheme is a recurring deposit. It invites regular deposits; these deposits earn a fixed interest rate that helps increase wealth significantly in the long run.
If you are planning to invest in a recurring deposit scheme, you must use an RD calculator beforehand. We will be telling you why:
What is an RD Calculator?
It is an online tool that provides an estimate of the amount you would accumulate on maturity. The amount includes the monthly investments made into the scheme and the interest accumulated on them.
The power of compounding and periodical & systematic investment makes recurring deposits an attractive scheme for salaried individuals who do not prefer investing in one go; rather, they prefer investing in small amounts regularly.
An RD calculator can be of great help if you are planning to invest in a recurring deposit account. Here are all the reasons why you should be using an RD calculator.
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It Helps you Decide the Amount of Investment
The first step of investing in any scheme is to decide how much you can afford to invest. If you are investing regularly, say every month, then you need to pick an amount that doesn’t shake your budget and, at the same time, earns you the return you are expecting to get.
If you are struggling to decide the amount, you can use an RD calculator. You can enter any random amount and see the returns it will generate in future. Accordingly, you can make the final decision if you are satisfied. Feel free to use the RD calculator innumerable times until you get the amount that aligns with your financial goals.
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It Helps your Financial Planning
As we have insisted before, financial planning is the backbone of a strong financial future. For successful financial planning, you need to have a sizeable savings fund and an impressive investment portfolio to live a comfortable financial life. As a recurring deposit scheme helps serve both purposes, an RD calculator can support your financial plans.
By knowing the amount, you will have in hand at the end of the investment tenure, you can make crucial investment and purchasing decisions.
Let’s take an example:
You are planning your retirement, and you need to accumulate INR 1 crore for it. As you are looking for minimal risks, you plan to invest in a recurring deposit scheme. For the same, you decide to invest INR 8,000 every month into a recurring deposit account.
By using the RD calculator, you can determine the maturity amount (Given the tenure is 10 years and the rate of return is 8%),
It would be INR 18,36,168 after investing INR 12,00,0000.
Now, as you would be certain that you will get this amount in the end, you can consider investing in supplementary savings or investment schemes to reach your savings goal of INR 1 crore.
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It is Free to Use
The good news is you do not need to spend a penny to use an RD calculator. It is free to use. Hence, you can use the tool indefinitely to formulate a strong financial plan for the future.
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It Saves you from Complex Calculations
Life is too short to devote your time and attention for doing complex calculations. Instead, you can use a user-friendly tool such as an RD calculator that offers you accurate results in a jiffy, that too without any calculation errors that would be a common occurrence when done manually.
The maturity amount of a recurring deposit can be calculated using the following formula:
A = P * (1+R/N) ^ (Nt)
Where,
A= Amount at maturity
P = Amount of Investment
R = Rate of Interest
N = number of compounding in a year
T = Investment tenure
As you can see from the above formula, the calculations can be quite complex and time-consuming. However, if you use an RD calculator, you will be sparing yourself from the complexities.
The Bottom Line:
An RD calculator can be a godsend when you are planning to invest in recurring deposits. So, what are you waiting for? Use this simple and efficient tool now!
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