Question 1

What is a recurring deposit?

Accepted Answer

A recurring deposit (RD) lets you deposit a fixed amount every month for a chosen tenure, earning a fixed interest rate. It is a disciplined way to save for a short-term goal.

Question 2

How is RD maturity calculated?

Accepted Answer

Each monthly deposit earns compound interest for the remaining months until maturity. The maturity value is the sum of all deposits plus the interest each one earns.

Question 3

Is RD interest taxable?

Accepted Answer

Yes. RD interest is taxable at your income tax slab rate. Banks deduct TDS if the total interest across your deposits exceeds Rs 40,000 a year, or Rs 50,000 for senior citizens.

Question 4

RD or SIP - which is better?

Accepted Answer

RD gives a fixed, guaranteed return with no market risk, suiting short-term goals. A SIP in mutual funds has higher long-term return potential but carries market risk. The right choice depends on your time horizon and risk appetite.

Year	Amount Invested	Est. Returns	Total Value
Yr 1	₹60,000	₹2,324	₹62,324
Yr 2	₹1.20 L	₹9,154	₹1.29 L
Yr 3	₹1.80 L	₹20,815	₹2.01 L
Yr 4	₹2.40 L	₹37,656	₹2.78 L
Yr 5	₹3.00 L	₹60,053	₹3.60 L

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