Everybody needs savings at some point in life, right? Well, this holds true for many of us, and we need some form of an investment option that could save our money yet yield some returns.
Saving money is a major element of creating financial stability. Being financially secure gives you the freedom not to worry about losing your job and taking care of your family. There are various ways through which one can save money.
One way is to invest in an FD ( Fixed Deposit). But before initiating to do so, you might go through a major dilemma of whether to do it or not. Worry not, in this article, we will take a look at some of the benefits of having an FD account, such as earning interest that you can use towards your financial goals. Not just that, but we will also inform you about a major step that most people miss before registering for an FD account – Using an FD Interest Rate Calculator.
What is a Fixed Deposit?
A fixed deposit, also known as an FD, is a time savings deposit product offered by banks and non-banking financial companies (NBFC) to their customers. You can open a fixed deposit account with a prescribed tenure that ranges from 3 – 10 years. Fixed deposits are interest-bearing deposits held for a fixed period of time. As the name suggests, your invested amount will remain fixed throughout the tenure unless you withdraw it before maturity, or if the terms and conditions specify.
Many investors, especially senior citizens with a considerable amount of savings, look at fixed deposits for investing, as the returns are often lucrative. Banks generally offer two types of rates for a fixed deposit – market-linked and non-market-linked.
You can get anywhere between 6% to 8% returns according to different Banks /NBFCs and for senior citizens, there will be an addon of 0.5% as well.
The rate of interest is calculated on the amount that an investor may need to park in an FD account. To simplify, the interest rate stipulated by the bank at the time of issuing an FD varies according to the term deposit: you will get a higher Interest rate on longer deposits.
What are the benefits of a Fixed Deposit?
You’ve decided to open a Fixed Deposit account. However, you are not sure whether this investment is right for you. Let’s make it easy for you, here are some advantages of an FD account over other investment methods:
Liquidity
You can deposit or withdraw money from the FD account as and when you wish, but the bank will decide the periodicity.
Guaranteed Return
The account offers you a fixed return on your investment and is one of the attractive aspects of this method.
Protection of Deposits
This investment option is fully protected under the Deposit Insurance and Credit Guarantee Corporation’s Act, along with other financial products offered by banks in India.
Stability
Over a period of time, a Fixed Deposit offers you a great return rate on your investment, which can be stashed away for future use.
What is the Need for a Fixed Deposit Calculator?
Fixed deposits are an excellent source of steady income. They offer guaranteed returns and great tax benefits. However, not all fixed deposits are the same as some may offer higher interest and lower maturity amounts while others offer lower interest and higher maturity amounts but FD Calculator comes to your rescue here.
Sit back and relax as we explore what most people find themselves thinking about when opening a fixed deposit – the returns! FD Calculator is a very useful tool available online on most banks and third-party websites for those looking to make a compelling investment with their money. This is an extremely handy and user-friendly tool that can help anyone who wishes to open a fixed deposit easily calculate how much they would earn on it.
How to Use a Fixed Deposit Calculator?
Type in the deposit amount in the first field (Fixed Deposit Amount)
Enter the interest rate in the next field (Rate of Interest)
Enter the tenure duration in months or years (or how long you want FD to be active).
To calculate the maturity amount, click the “Calculate” button. The estimated maturity amount will be displayed in the table below the FD Calculator tool. You can also check the total interest on this line.
FAQs
An FD (fixed deposit) calculator is a tool that makes it easy to calculate how much you’ll receive when you invest in an FD. The inputs are the amount of your deposit, the length of time you’re investing, and the interest rate that your bank offers on its FDs for that time period.
No, there are no chargers and you can use these calculators as many times as you want.
You can easily find an FD calculator on any Bank or NBFC’s website. You can find them on third-party platforms or in ReferLoan.
Yes, interest earned on an FD is taxable. But you can save taxes by putting that money into other tax-saving instruments under Section 80C of the Income Tax Act, 1961.