TRAC'S BOOK

Imagine you have two piggy banks or lockboxes at your school bank desk. In box A, you deposit money whenever you have spare cash, and you can withdraw it at any time. This represents a Savings Account. In box B, you commit to putting exactly 500 rupees inside every single month for a full year without taking anything out until the period ends. This represents a Recurring Deposit (RD) account.

Part 1

Place 12 physical token trays representing 12 months on your desk. On month 1, your deposit earns interest for 12 months. On month 2, your second deposit earns interest for 11 months. By month 12, your final deposit earns interest for only 1 month. Notice how the total interest is equivalent to 1 deposit earning interest for \(12 + 11 + … + 1 = 78\) months.

Part 2

Place the total principal collected from all 12 monthly deposits in a green stack on your desk. Next to it, place a smaller green stack representing the earned interest. Combine both stacks together into a single container. This combined total is the Maturity Value \(MV\) that the bank pays you at the end of the tenure.

Part 3

Let us visualize the flow of deposits over 12 months using a chart. For a Savings Account, the graph shows flexible deposits and flexible balance curves. For a Recurring Deposit (RD), the graph shows equal monthly steps accumulating linearly month by month. Red and blue indicators highlight how an RD enforces disciplined savings with fixed periodic deposits.

Part 1

Look at the triangular array representing monthly interest durations. The total duration for interest calculation forms an arithmetic series from 1 to \(n\) months. The sum of equivalent single-month periods is given by the formula \(\frac{n(n + 1)}{2}\) months, or \(\frac{n(n + 1)}{2 \cdot 12}\) years.

Part 2

Consider a bar chart showing the composition of the final payout. The base of the bar represents the total principal deposited \(n \cdot P\), while the top segment shows the interest \(I\). The total height of the bar represents the Maturity Value \(MV\).

Part 3

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