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See what a monthly recurring deposit matures to — and what the same monthly amount would have done in a SIP instead.
The short version
₹5,000 a month into an RD at 6.5% for five years matures at roughly ₹3,55,294. You deposit ₹3,00,000 and earn about ₹55,294 in interest — which is then taxed at your slab rate.
The same ₹5,000 a month into an equity SIP at an assumed 12% would reach about ₹4,12,432 over the same five years. That gap of roughly ₹57,000 is the price of certainty. Whether it’s worth paying depends entirely on when you need the money.
Maturity value
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Compounded quarterly, the standard basis for Indian bank recurring deposits. The SIP comparison assumes a 12% annual return and is a projection, not a guarantee.
What an RD is actually for
A recurring deposit is a fixed deposit you build up in instalments. You commit to a monthly amount for a set term, the bank pays a fixed rate, and the maturity figure is known on day one. Nothing about the outcome depends on markets, sentiment, or your timing.
That certainty is the whole product. It’s the right instrument when the money has a date attached — a deposit due in eighteen months, school fees next January, a wedding in two years. For those, an RD is not a conservative choice, it’s the correct one. Losing 15% of a house deposit three months before you need it is not a risk anyone is compensated for taking.
Where an RD stops making sense
Past about five years, the arithmetic turns against it. RD interest is fully taxable at your slab, so a 6.5% headline becomes roughly 4.6% post-tax in the 30% bracket — below most inflation assumptions. Money committed to a ten-year RD is losing purchasing power slowly and reliably.
The comparison figure in the calculator makes the trade-off explicit rather than theoretical. Over five years the gap is around ₹57,000 on a ₹5,000 monthly commitment. Over fifteen years, on the same monthly amount, it becomes several times the total you deposited. The longer the horizon, the more expensive certainty becomes.
Practical points
- Missed instalments attract a penalty and, in some banks, closure of the account after repeated defaults. Set the amount at a level you can sustain in a bad month.
- TDS applies to RD interest once it crosses the annual threshold, and TDS is not the same as your final tax liability.
- The rate is locked at opening for the full term. In a rising-rate environment that works against you; in a falling one it works for you.
- Post office RDs often carry a slightly different rate and a five-year standard term. Worth comparing against your bank.
- Senior citizens typically get around 0.5% more.
Common questions
Can I withdraw an RD early?
Yes, with a penalty. The rate is usually reset to whatever applied for the period actually completed, less around 1%. Partial withdrawal generally isn’t available — it’s all or nothing.
RD or SIP for a three-year goal?
RD. Three years is not long enough for equity to reliably recover from a bad stretch, and a shortfall on a dated goal is a real problem in a way that a lower return isn’t. Save the SIP for money you won’t need for seven years or more.
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Educational content only — not financial advice. Interest rates and TDS thresholds change; verify current figures with your bank. The SIP comparison is a projection based on an assumed 12% return and carries market risk.
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