Reader Pattu had developed a great retirement calculator and shared it for free here on OneMint about two years ago, and several people have downloaded and benefitted from that calculator.
Since then he has developed a few other calculators, and the latest is an Excel based RD calculator. You can download it here.
What I liked most about this calculator is that it calculates taxes also, and in that respect it is a lot more useful than most other online RD calculators.
Of course, being an Excel RD calculator also has the added advantage of not needing an internet connection, and then it is faster as well since you don’t have to click a button to recalculate amounts.
Taxes on Recurring Deposits
A quick word on taxes on RDs – RDs don’t attract TDS, however that doesn’t mean they are tax free. You are supposed to pay tax on RD interest just like you would pay tax on other interest.
To the best of my understanding, the proper way of doing this is to declare the interest that accrues to you every year, and then pay tax on it regardless of when your RD matures. For details read my Â post on taxes and interest rates on recurring deposits.
Advantage and Disadvantage of Recurring Deposits
When I looked at RD rates some time ago I noticed that banks don’t give you their maximum interest rates as RD rates, so if a bank gives 9% on a 400 day deposit, and 8% on a 1 year deposit then you are likely to get 8% on a 12 month RD, so in that sense you never get the best rate on a RD.
However, RDs are great when you want to get in the habit of saving regularly, and in this case even small sums add up. Most of us talk about how compounding greatly enhances returns, and while that is true, I feel that we don’t realize enough how quickly time passes.
What seems like just Rs. 10,000 a month now, will amount to a little over Rs. 4 lakhs in 3 years at 8%, and 3 years will also pass in the blink of an eye.
And then you will thank yourself for putting the little money away every month. This I say with personal experience, and I think everyone should get in the habit of forcing themselves to save at least a little every month and with time all of this adds up.
This great Excel RD Calculator will help you in getting an exact number on how much you will get in a few years time, and is a very useful tool. Please download it and keep it with you as a ready reference.
Please post any feedback, or report any bugs that you may have in comments – it is greatly appreciated.
Finally, a big thank you to Pattu for letting me share this great tool and I certainly do appreciate the hard work and skills that have gone into making it and I am sure other readers do too!