Recurring deposit
suppose you start a recurring deposit for Rs. 47,000 per month for 2 years at 8.25% compounded quarterly. If you were to see this number as a standalone fixed deposit that you set up every month for 24 months, you could come up with a table like I have here. Before you get to the table, here is a brief explanation on the columns.
- Month: First column is simply the Month.
- Principal (P): Second column is P or principal investment which is going to be the same for 24 months,
- Rate of Interest (r): r is going to 8.25% divided by 100.
- 1+r/n: In our case, n is 4 since the interest is compounded quarterly, and 1+r/n is rate divided by compounding periods.
- Months Remaining: This is simply how far away from 2 years you are because that’s how much time your money will grow for.
- Months expressed in year: I’ve created a column for Months expressed in a year since that makes it easy to do the calculation in Excel.
- nt: 4 multiplied by how many months are remaining as expressed in year.
- (1+r/n)^nt: Rate of interest raised by the compounding factor.
- Amount (A): Finally, this is the amount you if you plug in the numbers in a row in the compound interest formula.
So, Rs. 47000 compounded quarterly for 2 years at 8.25% will yield Rs. 55,338.51 after two years. The last row contains the grand total which is what the RD will yield at the end of the time period.
| Month |
P
|
r
|
1+r/n
|
Months remaining
|
Months expressed in year
|
nt
|
(1+r/n)^nt
|
A
|
| 1 |
47000
|
0.0825
|
1.020625
|
24
|
2
|
8.00
|
1.18
|
55338.51
|
| 2 |
47000
|
0.0825
|
1.020625
|
23
|
1.916666667
|
7.67
|
1.17
|
54963.21
|
| 3 |
47000
|
0.0825
|
1.020625
|
22
|
1.833333333
|
7.33
|
1.16
|
54590.45
|
| 4 |
47000
|
0.0825
|
1.020625
|
21
|
1.75
|
7.00
|
1.15
|
54220.22
|
| 5 |
47000
|
0.0825
|
1.020625
|
20
|
1.666666667
|
6.67
|
1.15
|
53852.50
|
| 6 |
47000
|
0.0825
|
1.020625
|
19
|
1.583333333
|
6.33
|
1.14
|
53487.27
|
| 7 |
47000
|
0.0825
|
1.020625
|
18
|
1.5
|
6.00
|
1.13
|
53124.53
|
| 8 |
47000
|
0.0825
|
1.020625
|
17
|
1.416666667
|
5.67
|
1.12
|
52764.24
|
| 9 |
47000
|
0.0825
|
1.020625
|
16
|
1.333333333
|
5.33
|
1.12
|
52406.39
|
| 10 |
47000
|
0.0825
|
1.020625
|
15
|
1.25
|
5.00
|
1.11
|
52050.97
|
| 11 |
47000
|
0.0825
|
1.020625
|
14
|
1.166666667
|
4.67
|
1.10
|
51697.97
|
| 12 |
47000
|
0.0825
|
1.020625
|
13
|
1.083333333
|
4.33
|
1.09
|
51347.35
|
| 13 |
47000
|
0.0825
|
1.020625
|
12
|
1
|
4.00
|
1.09
|
50999.12
|
| 14 |
47000
|
0.0825
|
1.020625
|
11
|
0.916666667
|
3.67
|
1.08
|
50653.24
|
| 15 |
47000
|
0.0825
|
1.020625
|
10
|
0.833333333
|
3.33
|
1.07
|
50309.72
|
| 16 |
47000
|
0.0825
|
1.020625
|
9
|
0.75
|
3.00
|
1.06
|
49968.52
|
| 17 |
47000
|
0.0825
|
1.020625
|
8
|
0.666666667
|
2.67
|
1.06
|
49629.63
|
| 18 |
47000
|
0.0825
|
1.020625
|
7
|
0.583333333
|
2.33
|
1.05
|
49293.05
|
| 19 |
47000
|
0.0825
|
1.020625
|
6
|
0.5
|
2.00
|
1.04
|
48958.74
|
| 20 |
47000
|
0.0825
|
1.020625
|
5
|
0.416666667
|
1.67
|
1.03
|
48626.71
|
| 21 |
47000
|
0.0825
|
1.020625
|
4
|
0.333333333
|
1.33
|
1.03
|
48296.92
|
| 22 |
47000
|
0.0825
|
1.020625
|
3
|
0.25
|
1.00
|
1.02
|
47969.38
|
| 23 |
47000
|
0.0825
|
1.020625
|
2
|
0.166666667
|
0.67
|
1.01
|
47644.05
|
| 24 |
47000
|
0.0825
|
1.020625
|
1
|
0.083333333
|
0.33
|
1.01
|
47320.93
|
|
|
|
|
|
|
|
Final Amount
|
12,29,514
|
