Modern-day life is hectic. After a tiring day at work, you may wonder if there is a way to earn money without doing anything. At first, it may seem unrealistic, but if you think carefully, there is, i.e., investing. It is an effective way to put your money to work and potentially build wealth.

Several new investment options have been introduced, but most investors prefer the old-school Recurring Deposit investment option. A term Deposit requires you to make fixed periodic deposits for a tenure. Through regular deposits and interest earned on them, you build a significant financial corpus, which helps a lot. You can invest in RD for any tenure between six months to 10 years.

Note that the RD is a fixed investment option, so it does not allow partial withdrawals. However, you can close it prematurely. Ideally, stay invested in the RD until its maturity to make the most of your investment.

What happens to your RD upon maturity?

RD maturity value is the sum of your principal deposit and interest earned. It depends on the deposit amount, deposit frequency, and applicable interest rate. To achieve a higher RD maturity value, deposit a significant amount at a higher frequency at a competitive interest rate. Use the RD calculator to calculate your investment’s maturity value. It is an online tool that offers accurate results in a few clicks.

Log on to your bank’s website to access the online tool, free of charge. Upon maturity, the bank credits the RD proceeds to your linked Bank Account. They notify you about the same via SMS, email, and banking apps. This ensures a secure and seamless transaction. Note that the bank deducts Tax Deduction at Source before crediting the RD interest income to your Bank Account.

The applicable TDS rate depends on whether your PAN Card is furnished. A TDS rate of 10% is applicable if your PAN Card is furnished, while a rate of 20% is applicable if your PAN Card is not furnished. Remember, the TDS is deducted from the interest income only if it exceeds the threshold limit. The threshold limit is Rs. 40,000 for regular investors and Rs. 50,000 for senior citizen investors.

Is it possible to continue with an RD post-maturity?

Since Recurring Deposit is such an incredible investment option, you may want to continue it with post-maturity. However, doing so is impossible. But you can always open a new RD post-maturity or even when the investment is ongoing. This gives you a good chance of wealth creation.

Note that interest income from all your RDs is taxable. It is taxed according to the individual tax slab rates. Hence, be mindful of this if you are planning to open an another RD.