Recurring Deposit (RD) is one of the safest investment options available, especially for those who want to save systematically without locking in a lump sum amount at once. Similar to a Systematic Investment Plan (SIP) in mutual funds, an RD allows you to deposit a fixed amount every month and earn interest like a Fixed Deposit (FD). Most banks, including the State Bank of India (SBI), offer RD accounts with attractive interest rates.
In this article, we will help you understand how much you can earn if you deposit ₹10,000 per month in an SBI RD account.
What Makes RD Better Than Fixed Deposit?
While both RD and FD are fixed-income investment options, an RD offers some additional benefits:
- In an FD, you have to deposit a lump sum amount, whereas in an RD, you can invest in small installments every month.
- Interest is compounded quarterly in an RD, helping your money grow over time.
- You can start an RD with a minimum of ₹100.
- There is no upper limit to how much you can deposit monthly.
- Any adult can open an RD account individually, and multiple RD accounts can be maintained at the same time.
SBI RD Tenure Options
SBI allows investors to choose RD tenure based on their financial goals. The available options are:
- 1 year
- 5 years (most preferred option)
- 10 years
To maximize returns, investors should select a tenure that aligns with their financial planning. Premature withdrawal before maturity is discouraged, as it reduces the interest earned. If you want to withdraw early, you must inform the bank or post office. However, SBI allows premature closure after 3 years, though interest will be paid at the savings account rate.
How Much Will You Earn with ₹10,000 Monthly Investment?
If you invest ₹10,000 per month in an SBI RD, here’s how your money will grow:
For Senior Citizens (7% Interest Rate)
- Monthly Investment: ₹10,000
- Duration: 10 years
- Total Investment: ₹12,00,000
- Maturity Amount: ₹17,37,012
- Profit Earned: ₹5,37,012
For General Investors (6.5% Interest Rate)
- Monthly Investment: ₹10,000
- Duration: 10 years
- Total Investment: ₹12,00,000
- Maturity Amount: ₹16,89,871
- Profit Earned: ₹4,89,871
How is RD Maturity Calculated?
SBI calculates RD maturity using the following formula:
M = R × [(1 + i) ^ N – 1] ÷ (1 – (1 + i) ^ (-1/3))
Where:
- M = Maturity amount
- R = Monthly deposit amount
- N = Total tenure (in months)
- i = Interest rate / 400
For lump sum deposits, the formula used is:
A = P (1 + r/n) ^ nt
Where:
- A = Final maturity amount
- P = Total investment
- r = Interest rate
- n = Number of times interest is compounded annually
- t = Tenure of RD
Why Choose SBI RD?
- High Safety: Backed by SBI, one of India’s largest banks, your investment is secure.
- Flexible Investment Amount: Start with as little as ₹100 per month.
- Attractive Interest Rates: Senior citizens get higher interest rates.
- Easy Online Management: Open and manage your RD through net banking.
- Auto Debit Facility: Set up automatic payments to avoid missing any installment.
Final Thoughts
SBI’s Recurring Deposit is a great way to build savings over time. By investing ₹10,000 monthly, you can accumulate a significant corpus with compounded interest. If you are looking for a safe and disciplined investment option, SBI RD can be a smart choice.
