FD Calculator

A fixed deposit (FD) is a secure investment option that is offered by banks and other financial institutions, where you deposit a lump-sum amount for a specific tenure. The tenure can range anywhere from 7 days to 10 years. In exchange, you get interest on the deposited amount at a fixed rate.

The interest, along with the deposited amount, is typically paid out at the end of the chosen tenure. With some types of FDs, however, the interest is paid out periodically, and only the principal investment amount is returned at the end of the chosen tenure.

Fixed deposits provide guaranteed returns, making them popular among risk-averse investors. The interest rate remains constant throughout the deposit period, ensuring a predictable return on your investment when it matures.

If you plan to invest in a fixed deposit, an FD calculator can be an invaluable tool. Here is a quick overview of the different ways in which it can help you.

• The FD calculator allows you to quickly and accurately compute the maturity amount of your fixed deposit based on the principal amount, interest rate, and tenure.
• The tool helps you save time by eliminating the need to calculate returns manually. It also helps you avoid calculation errors and ensures accurate financial planning.
• Since the term deposit calculator is free to use, you can adjust the values and create different investment scenarios. You can then compare them with one another and choose the scenario that aligns with your requirements.

Formula to Determine the FD Maturity Amount

An FD return calculator estimates the maturity amount from a fixed deposit by using the compound interest formula, which is as follows:

A = P [1 + (R ÷ N)]^NT

Here, A represents the amount you will receive from the fixed deposit on maturity, P represents the principal amount of investment, R represents the rate of interest, N represents the number of times the interest is compounded in a year, and T represents the investment tenure.

If you opt for a fixed deposit where the interest is paid out periodically instead of at the end of the tenure, then a term deposit calculator would use the simple interest formula to calculate the returns from the investment. The mathematical formula in this case would be as follows:

A = P + (P x R x T)

Here, A represents the amount you will receive from the fixed deposit on maturity, P represents the principal amount of investment, R represents the rate of interest, and T represents the investment tenure.

The fixed deposit calculator available on the Research 360 platform is simple and easy to understand. To use the calculator, simply enter the principal amount you wish to invest, the interest rate offered by the financial institution, and the tenure of your fixed deposit.

Once you enter all of these values, the fixed deposit interest calculator will instantly display the maturity amount and total interest earned, helping you make informed investment decisions.

Types of Fixed Deposit

In India, there are many different types of fixed deposits on offer. Let us quickly explore some of the most common types of FDs that investors often opt for.

1. Cumulative Fixed Deposit

   In a cumulative FD, the accumulated interest is compounded annually and paid out on maturity along with the principal investment amount. This option may be suitable if you do not require regular income and wish to maximise your returns.

2. Non-Cumulative Fixed Deposit

   In a non-cumulative FD, the interest is paid out at regular intervals (monthly, quarterly, half-yearly, or annually) as per your choice. This option may be suitable if you require regular income from your fixed deposit investment.

3. Tax-Saving Fixed Deposit

   A tax-saving fixed deposit offers tax benefits under section 80C of the Income Tax Act, 1961. The maximum amount you can claim as a deduction is limited to Rs. 1.5 lakh per year. However, unlike a regular FD, a tax-saving fixed deposit has a mandatory 5-year lock-in period.

4. Corporate Fixed Deposit

   As the name implies, a corporate fixed deposit is offered by a company instead of a bank or a financial institution. This type of FD typically has higher interest rates but also carries a higher risk of default.

5. Sweep-In Fixed Deposit

   A sweep-in fixed deposit combines the liquidity of a savings account with the high returns of an FD. When your savings account balance exceeds a predetermined threshold, the excess amount is automatically swept into a fixed deposit account. Meanwhile, if your savings account balance falls below the required minimum threshold, funds are automatically transferred from the FD to cover the shortfall.