Knowledge Base

Recurring Deposit (RD)

Maturity = P × [(1+r/4)^(4n) − 1] / (1 − (1+r/4)^(-1/3))

RD is like SIP for risk-averse investors — fixed monthly deposit with guaranteed returns.

Interest rates: Same as FD rates in most banks. Senior citizen rates usually 0.5% higher.

RD interest is taxable at slab rate — compares poorly with ELSS/PPF for tax efficiency.

Minimum tenure: 6 months. Maximum: 10 years. Most popular: 1-3 years.

Post office RD: 6.7% for 5 years — slightly higher than most bank RDs.

Pro Tip

If you can handle some risk, SIP in a debt mutual fund offers better post-tax returns than RD for 3+ year horizons.

Recurring Deposit (RD) - Complete Guide

Everything you need to know about Recurring Deposit (RD) and how to optimize your financial strategy.

Understanding the Formula

The core calculation is based on:

Maturity = P × [(1+r/4)^(4n) − 1] / (1 − (1+r/4)^(-1/3))

Key Concepts & Rules

RD is like SIP for risk-averse investors — fixed monthly deposit with guaranteed returns.

Interest rates: Same as FD rates in most banks. Senior citizen rates usually 0.5% higher.

RD interest is taxable at slab rate — compares poorly with ELSS/PPF for tax efficiency.

Minimum tenure: 6 months. Maximum: 10 years. Most popular: 1-3 years.

Post office RD: 6.7% for 5 years — slightly higher than most bank RDs.

Expert Strategy

If you can handle some risk, SIP in a debt mutual fund offers better post-tax returns than RD for 3+ year horizons.

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