14. Useful for Planning Short Term Goals
Advantages
• Yearly education fees
• If you are employed, higher education costs
• If you own a home, furnishing and renovation costs
• Overseas vacation
• Managing marriage expenses
Ease of Investment
• Easy for salaried customers
• Builds up saving discipline
Flexible Recurring Deposit
• Schemes that don’t penalize for late payment for a month
• Enables withdrawal of money any time you want
15. Disadvantages
Liquidity
Rate of Interest
Stringent Monthly Instalments
Cannot withdraw any part of the money until the tenure is over
Less rates of interest than RD as deposits are made in small instalments
Same monthly instalment every month; can’t pay more or less according to financial situation
16. Sum of n natural numbers :
1 + 2 + 3 + 4 + 5 + ⋯ + 𝑛 =
𝑛 𝑛 + 1
2
Maturity amount =Total amount invested + Interest earned from it
= nP + I
Interest earned on principal =
𝑟
12
% 𝑜𝑓 𝑃 over
𝑛 𝑛+1
2
months
=
𝑟
100
× 𝑃 ×
𝑛 𝑛 + 1
2 × 12
17. Mr. Dhruv deposits Rs. 600 per month in a recurring deposit account for
5 years at the rate of 10% per annum (SI).
Find the amount he will receive at the time of maturity.
How much would Rita have to deposit in a bank which pays 12% on
recurring deposits?The maturity value at the end of 2 years is Rs 5400.
Lets try…
