RD - Long term

RD will give better returns if it is done on continual basis for long term. Below illustration helps us to understand how RD helps in the long run

Amount	Interest rate	duration	Total amount invested	Interest amount earned	Total amount
1000	8.5	1 year	12000	563	12563
1000	8.5	2 years	24000	2229	26229
1000	8.5	3 years	36000	5094	41094
1000	8.5	4 years	48000	9264	57264
1000	8.5	5 years	60000	14852	74852
1000	8.5	10 years	120000	68836	188836
1000	8.5	15 years	180000	182410	362410

If you observe clearly

For 5 years the interest earned is 14852

For 10 years the interest earned is 68836

For 15 years the interest earned is 182410

The interest amount earned will be keep growing if your term increases. So it really fetches you very good amount at the end .This approach can be used to create retirement fund as well.

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Below illustration helps you to understand how irregular investment will NOT help you to make lump sum at the end

Amount	Interest rate	duration	Total amount invested	Interest amount earned	Total amount
1000	8.5	2 years	24000	2229	26229
1000	8.5	2 years	24000	2229	26229
1000	8.5	3 years	36000	5094	41094
1000	8.5	3 years	36000	5094	41094

Based on the above scenario, for 10 years the interest amount will be 2229+2229+5094+5094 = 14646

But if you invest continuously for 10 years the interest amount will be 68836

If you really want to create a lump sum, then you definitely have to invest regularly.

HAPPY SAVING!!!!!!!