In India, the value of deposits increased by approximately 9.8% in April 2022. The fixed deposit is a highly well-liked method of saving among regular Indian people. This is so because investing in FDs yields substantiat will accrue at maturity. Fixed deposits offer the best security for your money among all the investing options. Additionally, there are other advantages that you can get.
You can expect to get a fixed corpus with interest at maturity when you invest money in FDs. The best FD interest rates in India are offered by reputable financial organisations.
FDs make excellent collateral for loans that can readily be obtained to cover unanticipated crises. The loan amount can be as much as 90% of the FD amount.
Your interest on fixed deposits is eligible for a tax exemption of up to Rs. 10,000. These are just a few of the many benefits of making an FD investment. So, undoubtedly, FD is the perfect investment choice for you.
Now, you know the several benefits of an FD. But don’t forget to calculate the maturity amount and total interest amount that you will get. Doing these calculations before investing ensures that you invest in the best FD scheme.
How to use an online FD calculator?
Use an FD maturity calculator that is available online to save time and effort when calculating the interest on fixed deposits. Online calculators frequently pose the following queries:
- Whether the FD is cumulative or not.
- The sum invested in FD.
- The FD’s duration.
You might also need to enter information on a few other variables depending on the financial institution and the type of investment. You only need to enter the essential details into the fixed deposit interest calculator, and your response will be available in a matter of seconds.
Why should you use an FD calculator?
The calculation of interest at the time of maturity is now automated, thanks to technological advancements. You don’t need to waste your valuable time figuring out the solution on your own. You may now easily utilise an online FD maturity calculator to determine the interest you will get when your fixed deposit matures.
Here are the key explanations for why using an FD maturity calculator is recommended:
- Save time and energy- Naturally, utilising an online FD maturity calculator is simpler and faster than performing the calculations manually. The results will be seen in a matter of minutes, and it requires a minimal amount of effort.
- The numbers are always accurate- Using a fixed deposit interest calculator ensures your calculations are always precise. Since the procedure is entirely automated, there is no room for human error, ensuring that the response is correct each and every time.
- Helps assess the risk- You can predict the return on your investment by calculating the interest you’ll get when the investment matures. This will enable you to evaluate the risks and determine whether they outweigh the potential rewards.
- Helps choose the best plan- It is advisable to utilise an FD maturity calculator to estimate the returns on comparable FD plans provided by various financial institutions. This will enable you to choose the best FD interest rates in India and determine for yourself which firm has the best offerings.
How do you calculate interest on FD?
Fixed deposit interest calculators use two separate formulas to compute interest on FDs.
Simple interest formula: SI = PRT/100
SI symbolises simple interest in the formula above, where P stands for primary amount, the sum of money you invest in the fixed deposit. R stands for the rate of interest on the principal, and T is for the tenure of the fixed deposit. Let’s consider a possible scenario where P is Rs. 1 lakh, R is 10, and T is 10 years. The interest on the FD that you will receive when it matures will then be as indicated below.
SI = (1,00,000 x 10 x 10) / 100 = 1,00,000
Compound interest formula: CI = P (1+r/n) ^ (n x t) – P
P, r, and t are as defined above. The letter n denotes how many times interest will compound annually. Let’s figure out the CI for a principal of Rs. 10,000, compounded quarterly, for a period of 4 years with 5% interest.
CI = {10,000 (1+0.05/4) ^ (4*4)} – 10,000 = {10,000 (1+0.0125) ^ (16)} – 10,000 = {10,000 (1.0125) ^ (16)} – 10,000 = 12,199 – 10,000 = 2,199