FD Calculator

Investment is something everyone thinks of to secure their future financially. Choosing the right place to invest also becomes a hectic task for people. Therefore many institutions and banks provide a good investment platform called FD (Fixed deposit). Nowadays FD is very common among people for investment.

FD is a kind of investment provided through banks and other financial institutions called NBFC (Non-Bank Financial Company). It is a great idea for investing Money and getting profit in return. FD has many benefits and so people prefer to invest in it. 

There are lots of institutes and Banks which offer FD. Different Institutes have different services regarding investment interest. It becomes very difficult sometimes for people to choose one from them. So, to make it easy FD Calculator has been developed. It calculates interest rates and the maturity amount along with the tenure. It makes it easy for people to check each bank’s interest rate and tenure and then to choose the best for them. Online FD calculator makes it possible for someone to figure out all the rates of investment and compare without getting stressed. It eases stress and saves time.

In this article, we will know all about the FD, FD calculator, its benefits, and why to use it with its working method, etc. So, let look upon it-

What is FD

FD (Fixed deposit) is a kind of investment platform which is provided by financial institutes or banks. It is an investment platform that allows investors to invest their money and turn it into guaranteed returns. These returns are calculated at fixed FD rates for a fixed period of time which can be 7 days to 10 years and more. People invest a certain amount of money in a merchant account (fixed deposit account, usually associated with a savings account) which earns at a fixed rate of interest for a fixed period of time. This rate of great interest remains constant throughout the tenure. This is just how a fixed deposit provides interest. The interest is provided and funded to you at the time of maturity. Some users also break their deposited fund before maturity with certain terms and conditions with the penalty. The process is one click away to invest your money in FD. 

How does FD work?

You may be thinking of a deposit that is fixed with lending money to a bank or an NBFC. When you buy an FD, the bank certifications return the contributed total amount by the end of tenure, known as the development time frame, and payback. The bank may utilize this cash to loan different borrowers and charge them interest for the equivalent. After the tenure, a part of this interest is given over to you.

The interest offered depends on the maturity or tenure period of the FD. A 7-day deposit that is fixed carries a lesser annual rate of interest compared to a one-year FD. This is always to compensate for the time-risk of money. Merely a rupee today is more valuable than the rupee that is a year from now. The interest pushes up the costs with time. A rupee will buy you more goods than today.

You can decide to reinvest the interest or receive an interest amount periodically in your banking account.

Types of FD

Cumulative FDs: It pays you the interest amount and the principal amount at the time of maturity. The interest is reinvested every year. This means you won’t be eligible to receive a regular interest and receive a principal sum after this FD tenure. The cumulative FD option could be suitable where no need for everyday flow of income for you is available. Under this program, you will take advantage of the power of compounding, as the following year’s interest would be calculated on the principal plus interest of the previous year.

Non-cumulative FDs: It will pay you interest at fixed intervals. You could decide to get interest payments monthly, quarterly, half-yearly, or annually, depending on your needs. This will offer you a regular stream. However, the downside of non-cumulative FDs is that you shall lose out on earning interest.

Benefits of FD

Check out the top benefits of an FD below-

1. Fixed returns: The fixed deposit always comes with fixed returns. After a certain period of time which is also known as the maturity period. It gives you the returns with some interest. Even if the interest level decreases in the market value it doesn’t affect your FD.So, you can always relax about it.
2. Hassle-free investment: Opening an FD account is very simple and applies a hassle-free method. You don’t need any paperwork or visit several banks for it. You just are a few clicks away to open an FD account. It only needs a savings account. When you open an FD account you don’t have to worry about your invested money and check regularly because the deposited FD is safe and can be withdrawn in a hassle-free way after a certain period of time which is called the maturity period
3. Compounding: When you have an FD account you avail the interest of principal amount and as well as the Compound interest. These are the major benefits of FD.
4. Regular income: You can choose month-to-month or quarterly interest pay-outs to get regular income from your FD account.
5. Built-in flexibility: FD account is built with high flexibility which means that you can withdraw your money from the FD fund whenever you need it. It allows you to withdraw 90% of the amount and then you can pay that amount with interest after the use. 
6. Tax-saving scheme: If you want to use FDs to save taxation, choose the five income taxes FD that are preserved just take advantage of exemptions under section 80c of the income taxation act 12 months.
7. Adaptable residency: A Fixed deposit is exposed for a brief short or long-term which means that if you don’t want to withdraw your fund even after a maturity period, it can be there for an even longer time. A banking fundamental like NBFCs offers adaptable residency for more than 10 years
8. Higher Rates for Senior Citizens: Senior citizens can earn much more from their life’s savings and move one step closer to the no-compromise life that is retired.
9. Low Minimum Investment: If you want to inculcate an investment habit but do not have a big amount to do so, then FDs are a good option because investment amounts can begin as low as Rs. 500.

Types of Fixed Deposits

You have to know different FD offers in the market before you invest in a fixed deposit.

1. Standard Term Deposits: Standard term fixed deposits are investment schemes wherein you spend a sum for a fixed period and a predetermined interest rate. The time of tenure or investment can range from 7 days to 10 years. The interest offered depends on the timeframe of investment and also the institution.
2. Senior Citizen Fixed Build Up: For people over 60 years of age, banks and NBFCs offer a higher rate of interest on FDs than many other investors, often providing about 25-50 basis points (0.25-0.50%) or more. They also provide a tax benefit. Interest for senior citizen FDs doesn’t carry a tax deduction at supply if it does not exceed ₹50,000 a year. Other investment choices do not provide this benefit for seniors.

Spending in FDs as a senior citizen reduces the tax burden and hence, enhances the returns.

1. Tax-Saving Fixed Deposit: There are specific FDs being tax-saving that qualify for tax deductions. A tax-saving FD includes a maturity period of 5 years while the amount that is principal up to ₹1,50,000 per annum is tax-deductible under section 80C for the Indian Income Tax Act.
2. Flexi Fixed Deposit: A flexible deposit that is fixed linked to your savings account. In this plan, you can instruct your bank to automatically transfer any sum beyond a predetermined balance as a fixed deposit via the Flexi weep-in feature. Any increase of amount is supposed to be transferred to an FD as an example if you like to maintain a balance of ₹20,000 each month. Conversely, if your balance falls below ₹20,000, the financial institution shall liquidate a percentage of your FD to maintain your balance. It becomes a good thing about investment and liquidity.
3. Fixed Deposit for Non: Resident Indians-Non-resident citizens that invest in non-resident external (NRE) or non-resident ordinary (NRO) fixed deposits. NRE FDs are suitable for citizens making a foreign. The most important benefit of NRE FDs is the whole amount, principal, and interest which are tax-free even though there are currency fluctuations. NRO FDs can be deposited in Indian or even foreign currency. They are taxable at 30per percent per annum.

Who should invest in an FD

Whenever you purchase a fixed deposit the period of investment or tenure and interest amount is predetermined. The institution also assures one to return hard-earned money at maturity. It produces FDs as a relatively safe investment avenue. 

Fixed deposits are an investment that will work for:

• People with a low-risk appetite would like to invest but still cannot take high risks. FDs give a higher return than money kept in the family savings.
• For meeting goals which are short-term returns are assured, and volatility is low.
• Balancing the risk in a portfolio that is overall good. Even for people taking a medium-high risk, investing a percentage of the overall funds in fixed deposits balances out the chance from market-linked instruments like equity or mutual funds.
• Retired individuals who wish to ensure the stability of investment

What is FD Calculator

Nowadays FD calculator is a tool that is used to calculate the sum amount and interest amount regarding the Fixed deposit. You can essentially put your speculation sum, FD Period and Interest Rate to get your required interest amount through the FD calculator.

It is an instrument intended to calculate the interest rate amount that financial investors ought to know toward the end of the maturity period. It ascertains how much revenue one can acquire on a fixed deposit. It needs the principal amount, FD financing cost, and tenure time to get the result. Maturity is a time frame that one gets toward the end of the FD. It comprises the interest earned on the deposited amount. It lets you look at the interest rates and financing costs.

FD Calculator – Benefits

Simply like any other financial choice. FD additionally entails ticking one’s budget and making it work in unison with all the financial goals.

Fixed deposit is exactly about minimizing guaranteed risks and returns. If you purchase the market (like equity mutual funds), there will be a considerable risk. With the help of the FD calculator, you can know how much to invest into your FD account. 

Fixed deposit calculators also help in comparing the various types of FD schemes provided by banking institutions as well as other financial companies. One can comprehend the offers for best returns during the desired tenure.

Some of the prime benefits of using the FD Calculator are detailed here:

• No scope for errors since it has an automatic process. It gives an accurate figure in the result.
• It saves your precious time on doing complicated calculations regarding amounts related to FD.
• The FD calculator tool is free of cost and so customers can use it anytime to compare returns for different combinations of FD rates, tenure, and amount.
• It enables you to compare various FD plans by sitting at home.

The calculation process of Fixed Deposit

The process of calculating fixed deposit amount includes-

1. Interest on the brand-new principal: Banks adds compound interest quarterly. Therefore, after each couple of months, they add the interest to your principal amount as well as in the next interest percentage. It is calculated by the use of a new principal amount. Let’s say your starting balance is Rs 50, 000 and after the quarter the interest gain becomes Rs 1000, then for the next quarter, your principal amount is supposed to be Rs 51, 000.
2. Interest calculation pattern: As the Banks compound interest quarterly, thus the supplied rate of interest splits into 4 halves and also the interest gain is computed utilizing 1/4th of the offered interest. Let’s state the interest rate agreed to you is 8% p.a along with your bank interest by quarterly pattern, in just about every one-fourth you’ll gain interest at the rate of 2% p.a.
3. Investment tenor: The interest rate supplied on fixed deposits increases with increasing financial investment tenure. Let’s state you are spending Rs 50, 000 for any period of half-year, and you also invest a certain quantity at the same period of 3 years, then you will obtain higher profits in return compared to before.

NOTE: Some financial institutions offer an additional rate of interest on average due to their existing clients and senior citizens. For example, Bajaj Finance offers an interest additional of 0.35per cent p.a for any senior citizen along with an online offer of an FD calculator that helps to determine your maturity of fixed deposit investment.

How to Use an FD Calculator?

The bank gives interest on FDs, calculates interest in two various techniques: 

Simple Interest and Compound Interest

• Simple interest is gained only on the principal amount while compound interest is earned on both principal and the interest.

The formula for SI is (P)that is the principal of Interest *(R) which is the rate of interest *(T) Period divided by 100.

• Compound Interest is calculated by multiplying the principal amount plus annual interest rate* amount of compound durations minus one. Now, the original amount is subtracted from the resulting value.

The process may be a little complicated to know. It is advisable to get in touch with the bank that is nearest to the Fixed deposit interest rate.

So, the FD calculator saves your time by giving you errorless results in a short time.

Formula to calculate fixed deposit amount after FD maturity-

M = P*{[1+(r/n)]^(n*t)}

Where,

M = Maturity worth

P = Principal Amount

n = Compound Interest Regularity

(then n=2 if interest is compounded quarterly n=4, bi-annually)

r = Rate of interest (annual interest rate)

t= No. of Period (in years)

Assume that you invest Rs. 1,00,000 inside a deposit that is fixed yearly interest rate of 6.5per cent (prevailing rate of interest in India) to get in one year which will be compounded quarterly (n=4)

Then ,M = 1,00,000 * {[1+(0.065/4)]^(4*1)}

M= 1,06,660

Note: This is pre-tax since interest income from fixed deposits is taxable according to your tax which is certainly applicable and your returns may vary appropriately.

FD Calculator – FAQs

Q1. What exactly is an FD Calculator?

Ans. an FD calculator is a tool that is used to calculate the interest amount and rate one can get from a Fixed deposit. It gives an accurate idea of the amount to be spent on FD to get more interest.

Q2. How could the interest of a bank FD be calculated?

Ans. The interest of bank FD can be calculated at simple interest. For the tenure of greater than 6 months uses compound interest. For monthly interest Banks usually calculate Interest with a discount price.

Q3. What are the details required to use an FD Calculator?

Ans. The details required to use an FD calculator are the Deposited amount, tenure, and the rates at which FD is set.

Q4. What is the minimum tenure to spend in a fixed deposit?

Ans. The minimum tenure to spend on a Fixed deposit is for at least 7 days. It varies with different banks and financial institutes. 

Q5. Is the interest made on a fixed deposit taxable?

Ans. Yes. The interest made on a fixed deposit is taxable according to Section 80C of the Income Tax Act 1961. Investors claim for deduction upto Rs. 1.5 lacs.

Q6. What could be the interest rate for senior citizens for fixed deposits?

Ans. The interest rate for senior citizens for Fixed deposits is around 0.50% more than usual users. Axis banks give a different rate of interest for the different tenure of timeframe.

Q7. Will there be an FD that calculates interest on senior citizens and tax-preserving FD schemes?

Ans. No, there won’t be an FD that calculates interest on senior citizens and a tax preserving FD scheme as there is no separate deposit for a tax saving. 

The tool only calculates the interest amount with rates and tenure of the fixed deposit scheme.

Q8. Is it good to keep cash in FD?

Ans. Buying Fixed Deposits (FD) is considered one of the best investment choices and is perfect for people who want stable and high returns without getting a market risk. FDs offer a better return than any preserving reports and the benefits of keeping your money in FD go beyond the return price in any other investment platform.

Q9. What are the benefits of doing FD?

Ans. Here are a few of the top benefits of an FD:

• Fixed returns
• Magic of compounding. 
• Regular income. 
• Built-in flexibility
• Hassle-free investment
• Savings account.

Q10. Is FD bad or good?

Ans. FD is a relatively safe investment option. Market fluctuations do not impact the interest rate that you will get on an FD. Nonetheless, there are shared funds like liquid funds that can provide similar if not better, levels of security and returns.

Q11. How can I make more money from FD?

Ans. Here are some methods by which you can make more money from FD- 

• Invest in numerous deposits
• Gain from varying interest levels.
• Build a security net against riskier investments.
• Lower your tax obligations.
• Gain higher returns.
• Take advantage of varying tenure, so that you can earn a good amount of money.