# Recurring deposit

by theDatatalks . 22 Apr 2020

For detailed explanation, please refer Reinvestment Deposit Scheme

The total interest receivable from a recurring deposit is calculated as below

• Identify the compounding period

• Quarterly has 4 times compounding in a year,
we have to compound the interest for every 3 months
• HalfYearly has 2 times compounding in a year,
we have to compound the interest for every 6 months
• Monthly has 12 times compounding in a year,
we have to compound the interest for every 12 months
• Yearly has 1 time compounding in a year,
we have to compound the interest for every 1 month

Calculate the simple interest using regular formula (pti/100) for each month and add the cumulative interest to the invested amount based on the compounding period.

where,
i - Rate of Interest(%)
t - Total number of periods(months)
p - Monthly recurring amount(currency)

Below is an example for quarterly compounding for a monthly recurring deposit of 1000 at 6% annual interest

Monthly recuring Deposit Interest Remarks
1000 5 1000*6÷100÷12=5
1000 10 2000*6÷100÷12=10
1000 15 3000*6÷100÷12=15
1030 20.15 (4000+5+10+15)*6÷100÷12=20.15
1000 25.15 and so on
1000 30.15
1075.45 35.52725
1000 40.52725
1000 45.52725
1121.582 51.13516
1000 56.13516
1000 61.13516
1168.405 66.97719

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