RD Wealth Intelligence
What is a Recurring Deposit?
An RD allows you to invest a fixed amount every month for a specific tenure, earning a guaranteed interest rate. It's the perfect bridge for disciplined savers who want FD-like safety without the need for a large lump sum.
Maturity Formula
M = P * [(1+r/n)^nt - 1] / [1 - (1+r/n)^-1/n]Monthly Saving Benefits
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Disciplined Savings
Auto-debit options help maintain investment consistency.
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Lower Threshold
Start with as little as ₹500 - ₹1000 per month.
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Senior Citizen Plus
Typically offers 0.5% higher yield for retirees.
RD vs SIP: The Battle
Recurring Deposit (RD)
Guaranteed returns (6-8%). Best for short-term goals (1-3 years) like a vacation or down payment where safety is key.
SIP (Mutual Funds)
Market-linked returns (10-15%+). Best for long-term wealth (5+ years) where you can withstand short-term volatility.
The Penalty of Inconsistency
Missed RD installments can be costly. Banks charge:
- Standard Fine: ₹1.50 per ₹100 per month of delay.
- Maturity Delay: The maturity date may be pushed forward by the number of days delayed.
- Premature Closure: Breaking an RD usually incurs a 1% interest penalty on the actual tenure run.
RD Strategy FAQ
Can I change my installment amount?
Usually, No. Conventional RDs lock the amount at the start. For flexible payments, look for "Flexi-RD" schemes offered by major banks.
Is RD interest same as FD?
Yes, RD interest rates typically mirror the FD rates for the same tenure. However, since money is deposited monthly, the effective interest earned on the total deposited corpus is lower than a lump-sum FD.
Can I skip an RD payment?
Missing an installment usually results in a penalty fee (e.g., ₹1-₹2 per ₹100). Consistent delays may lead to the account being closed prematurely.
Is RD better than SIP?
RD offers guaranteed returns and principal safety (ideal for less than 3 years). SIP in mutual funds has market risk but often delivers higher returns for long-term saving (5+ years).
Standards Protocol
Fixed Income Security Benchmarks (v2.1)
Last Audit
January 2026 | Reviewed by Fixed Income Experts