What is RD ?

RD stands for Recurring Deposit. It is a type of investment scheme offered by banks and other financial institutions in which an individual can deposit a fixed amount of money at regular intervals of time (usually monthly) for a fixed period of time, and earn a fixed rate of interest on it.

In an RD scheme, the interest rate offered is generally higher than that offered on a savings account, and the investment period can range from a few months to several years. The interest earned on an RD account is compounded quarterly, which means that the interest earned in each quarter is added to the principal amount, and interest is then calculated on the new amount.

At the end of the investment period, the investor receives the total amount deposited along with the interest earned, which makes it a popular investment option for individuals who want to save money for a specific financial goal such as buying a house, car, or for children’s education.

RDs are considered to be a safe and secure investment option, as they are offered by banks and financial institutions that are regulated by the government. However, the returns on an RD are relatively low compared to other investment options such as mutual funds or stocks, and the interest earned is taxable as per the individual’s income tax slab.