Fixed deposits are a safe method of investment. They are also referred to as FDs or Term deposits. In this method of investment, the investor is required to deposit a lump sum amount for a predetermined tenure on a fixed interest rate. Upon the maturity of the FD, the investor receives the investment amount in addition to the compound interest levied on the same.
Benjamin Franklin once said, “An investment in knowledge pays the best interest.” Therefore, knowing about the best method of investment will ease your financial planning. It will ensure that you make the right financial decision. Understanding how an FD maturity calculator works can be the first step in doing so.
What is an FD Maturity Calculator?
An FD Maturity Calculator is a useful tool that helps you calculate the interest earned on your investment. It takes into account the principal investment, the interest rate, and the tenure of the fixed deposit. An FD maturity calculator is an easy-to-use tool that helps you compare between banks providing the highest interest rate on your FD maturity.
Wealth is not an easy subject, especially when it comes down to investing a large sum of money at once. By using an FD maturity calculator, you can check the compound interest you would make on your investment with a tenure of as less as 7 days to as much as 10 years. It will ensure that you are making the right choice with your investment.
How to Determine FD Maturity Amount
An FD Maturity Calculator measures the maturity value of the investment based on three factors. These variables vary from individual to individual as they need to be decided and entered by the investors themselves.
Formula to calculate FD maturity amount –
A = P * (1+ r/n) n*t,
A = Value of Maturity
I = A – P
P = principal sum
r = interest rate
n = compound interest rate
t = number of years
I = total interest earned
Here is an example to better understand how a FD maturity amount is calculated –
Suppose you deposit Rs. 50,000 that is held for three years at a quarterly compounding interest rate of 10% then the interest earned at maturity would be:
A= 50,000 {1 + (0.1/4)} ^ (4 * 3)
A = 50,000 (1 + 0.025) ^ (12)
A = 50,000 (1.025) ^ (12)
= Rs. 67,244 (approximately)
CI = Maturity Amount – Principal Amount
CI = 67,244 – 50,000
= Rs. 17,244
An online FD maturity calculator works on the above-mentioned mathematical formula.
How To Use FD Maturity Calculator Online?
FD maturity calculator is very easy to use. Here’s how you can calculate using them online –
Step 1: Search for an FD maturity calculator online.
Step 2: Enter your principal amount, interest rate, and tenure.
Step 3: The maturity value and interest returns will be displayed on the screen.
What is a Fixed Deposit Account?
A Fixed Deposit Account is a financial instrument that helps you in saving money. A fixed deposit account can be used for various purposes. It can help you purchase your dream house, keep a sum aside for your kid’s future, or be prepared for financial emergencies. Owning a fixed deposit account can prove to be beneficial for you in several ways.
You can open a fixed deposit account for a minimum of 7 days to a maximum of 10 years. You can choose to receive the maturity value periodically or get it at once after the completion of its tenure. Although, if you withdraw money from your fixed deposit account before its maturity, you would be obligated to pay a penalty.
Features of a Fixed Deposit Account
Opening a fixed deposit account comes with many benefits for you –
- You receive the assumed sum. Regardless of market fluctuations in interest rates, you receive the maturity value guaranteed to you without any market risks.
- A fixed deposit account is a safe investment option to receive guaranteed interest on your investment.
- The rate of interest on your fixed deposit account is fixed. The rate of interest depends on the term chosen by you at the time of opening your account.
- Opening a fixed deposit account comes with flexible tenures. You can open a fixed deposit account for a minimum of 7 days to a maximum of 10 years.
- You receive higher returns on your investment if you opt for a longer tenure.
- You can either receive the maturity value periodically or after the term.
- You can also opt to reinvest the interest earned. It is also known as cumulative FD.
- A fixed deposit account is beneficial for senior citizens as they get higher returns on their FDs.
- You can get loans against your fixed deposit account in case of emergencies.
A Fixed Deposit account can be a hand of help when you are trying to reach your savings goals. The major benefit of an FD account is that it grows your money; you earn more than you invest, all thanks to the high interest rate and compound interest. An FD calculator can make investment easier. The tool is user-friendly and gives you error-free results.
