Recurring Deposit Calculator

What the tool works out

A recurring deposit takes a fixed amount each month for a fixed term at a fixed rate, and pays out a known lump sum at the end. Depositing 500 a month for 36 months at 6% puts in 18,000 and matures at 19,766.39, so the interest across the term is 1,766.39. Nothing about that figure depends on markets; it depends on the rate written into the product.

Why maturity exceeds the deposits

The maturity exceeds the deposits because each instalment earns interest for however many months remain after it is paid. The first deposit compounds for the whole term, the last for almost none, and the total is the sum of thirty-six different growth periods rather than one.

The timing convention

The timing convention matters more than it looks. This calculator treats each deposit as arriving at the start of its month, which is how recurring deposit products are usually written, and multiplies the annuity total by one further month of growth. Treating the deposits as arriving at the end of each month instead gives 19,668.05 on the same inputs, a difference of 98.34. Neither convention is wrong; they answer slightly different questions, and a maturity figure quoted by a provider will follow whichever one their product uses.

What the fixed rate does not fix

The rate is fixed in nominal terms, which is the whole appeal and also the limitation. What 19,766.39 buys at maturity depends on how prices have moved in the meantime, and that is outside the calculation entirely. The BIS maintains consumer price series for more than 60 countries, some running back to the mid-19th century, which is where a sense of that drift comes from.

Set against a market-linked plan, the comparison is between a known number and an unknown one. Long-run returns are measured asset by asset and country by country rather than as a single figure: a dataset covering 16 advanced economies from 1870 to 2015 assembles total returns for equity, housing, bonds and bills, which is the sort of evidence that comparison rests on. A recurring deposit sits at the certain end of that range by design, and the certainty is what is being paid for.

What the calculator leaves out

• Tax on the interest, which is treated as income in most systems and varies by country
• Any penalty for missing an instalment or closing the account early
• Compounding less often than monthly, which some products use and which lowers the maturity
• Inflation, so the maturity figure is in the money of the final month
• Any change to the rate, which a fixed-term product does not normally allow

For educational illustration only

This calculator applies one rate to one deposit schedule and reports the total. It assumes every instalment lands on time, the rate never moves, and nothing is withdrawn. The output is the arithmetic of a fixed product, not a comparison against anything else.