Recurring deposit: save the same amount every month
Short answer: A recurring deposit is a fixed amount put aside on a schedule, usually monthly, into an account that pays interest. The balance is the sum of every deposit plus the interest those deposits have earned.
| Year | Put in so far | Interest so far | Balance |
|---|---|---|---|
| 1 | $1,200 | $22 | $1,222 |
| 2 | $2,400 | $94 | $2,494 |
| 3 | $3,600 | $218 | $3,818 |
| 4 | $4,800 | $396 | $5,196 |
| 5 | $6,000 | $630 | $6,630 |
| 6 | $7,200 | $922 | $8,122 |
| 7 | $8,400 | $1,275 | $9,675 |
| 8 | $9,600 | $1,692 | $11,292 |
| 9 | $10,800 | $2,174 | $12,974 |
| 10 | $12,000 | $2,725 | $14,725 |
| 11 | $13,200 | $3,347 | $16,547 |
| 12 | $14,400 | $4,044 | $18,444 |
A projection under the stated rate. Real rates change and results may differ.
An illustration under the assumptions listed below, not a forecast and not personal advice.
What problem does it address?
It turns saving into a habit with a known end point. It helps when the goal is a set sum by a set date and the saver prefers a predictable account to a market investment.
How does it work?
- Each month the same amount is added at the end of the month.
- Interest is worked out on the running balance every month, at the annual rate divided by twelve.
- Earlier deposits earn interest for longer, so the interest column grows faster than the deposits do.
Key terms
- Contributions. The money you put in. Nothing here is a forecast.
- Interest earned. The part of the balance that came from the rate. It depends entirely on the rate you assume.
- Compounding. Interest earning interest. Here it is applied monthly.
What are the benefits?
- Easy to automate
- The path and the end value are easy to see
- The rate on a bank product is often fixed for the term
What are the risks and limits?
- A rate can change when the term ends
- Inflation can reduce what the final balance buys
- Money may be locked or penalised if taken out early, depending on the product
What does the simulator assume?
- Deposits are made at the end of each month
- The rate is nominal, compounded monthly, and stays the same
- No tax or fees unless you add them in your own rate
Different assumptions give different results. A figure here is a projection under these assumptions, not a prediction.
Where to read more
- SEC Office of Investor Education (Investor.gov): Plain-language guides to compound interest, saving and investing basics, and a compound interest calculator.
- Consumer Financial Protection Bureau: Consumer guides on savings accounts, deposit products, loans and paying down debt.
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Frequently asked questions
How much will a recurring deposit be worth?
It depends on the deposit, the time and the rate. Enter your numbers above: the result is the contributions plus the interest earned under the rate you chose.
Is the interest rate fixed?
Only if your product fixes the rate for the full term. Check the product's own terms; this page uses the single rate you enter.
What changes the result most?
Usually time and the deposit. The rate matters more the longer the money stays. Change one input at a time above to see which moves the result most.
Put your income, spending and goals into the Goal check to see how a plan sits against what you have left each month. Free, no bank sync.
Open the Goal checkThis page is for education. It shows what a strategy does under stated assumptions and is not personal investment advice.