Investors can benefit from Recurring Deposits (RD) by making consistent small deposits regularly. Putting money into research and development is like setting up a systematic investment plan, with a consistent monthly deposit. In this case, interest is computed using the MRni formula, resulting in enhanced returns for investors. This service can be accessed at government and private banks as well as post offices. RD is receiving a yearly interest rate ranging from 5.5% to 6.7% on average. A key characteristic of a recurring deposit is that it allows you to invest a consistent amount monthly, similar to a SIP. In this case, the interest on your account grows every quarter. Let’s clarify how the interest is deposited into the RD account.
It contains two different types of schemes. A specific amount must be deposited monthly in regular recurring deposits. In contrast, the amount can be adjusted in flexi recurring deposits at a later time.
What is the function of the MRni formula in RD?
M equals the amount reached upon maturity.
R represents the installment amount that is paid on a monthly basis.
n represents the amount of quarters (duration)
i represents the quarterly interest rate (overall amount of interest accrued).
The formula M equals R times the quantity (1 plus i raised to the power of n, minus 1) divided by 1 minus (1 plus i) to the power of -1/3. M represents the sum at the time of maturity. R represents the overall number of payments, n stands for the total number of quarter periods, and i denotes the interest rate.