Small Savings, Big Impact

A **Recurring Deposit (RD)** is the perfect tool for disciplined savers. Unlike a Fixed Deposit where you need a lump sum, an RD allows you to invest a fixed amount every month while earning interest rates similar to FDs.

It is ideal for short-term goals like planning a vacation, buying a bike, or saving for an insurance premium. You commit to a tenure (e.g., 12 months) and a monthly deposit (e.g., ₹5,000).

How is RD Interest Calculated?

Most Indian banks calculate RD interest using the **Quarterly Compounding** formula.
This means the interest earned in the first quarter is added to your principal, and in the next quarter, you earn interest on your deposit plus the interest already earned.

RD vs. SIP: What to Choose?

• Risk Profile: RD offers guaranteed returns and capital safety. SIPs in Mutual Funds are market-linked and carry risk.
• Returns: RD returns are fixed (currently 6-7.5%). SIPs can potentially offer 12-15% over the long term.
• Penalty: If you miss an RD installment, banks often charge a penalty. SIPs are more flexible; you can pause them without a fine.