In the current era, potential investors consider several steps before investing their hard-earned money. One of the most popular investment schemes, fixed deposit is an option preferred by many Indians. Moreover, the fd interest rate is quite a lucrative option
Before investing in this instrument, the usage of certain calculators is on the rise. It gives a brief idea to the investors about what they’ll be reaping from their investment.
What is a fixed deposit?
Also known as a time deposit or term deposit, a fixed deposit is an investment offered by banks/financial institutions where a potential investor deposits a specific amount of money for a specified period at a fixed interest rate.
The fixed deposit is one of India’s safest and low-risk investment schemes, as the returns are guaranteed here. Moreover, the principal amount is generally insured by the government up to a certain amount.
Once the tenure comes to an end, the investor can either withdraw the principal along with interest or renew the deposit for another term. Early withdrawal may result in a penalty or loss of interest amount.
What is a fixed deposit calculator?
It is a tool used to calculate the interest amount earned on a fixed deposit investment. Inputs such as the principal amount, duration of the fixed deposit, and the applicable rate of interest are taken into account to calculate the total interest earned as well as the maturity value of the investment.
Several such tools are available on the Web/Play Store or App Store that help you make informed investment decisions.
What are its benefits?
● Assured returns
The topmost advantage of investing in a fixed deposit is that it offers assured returns on your investment. The rate of interest offered is fixed for the deposit duration, and the investor is assured of earning a specific amount of interest on your investment.
● Low Risk
FDs are considered to be a low-risk investment scheme as they are not affected by fluctuations in the market. For an additional layer of security, the principal investment is generally insured by the government but up to a certain amount.
● Flexible Tenure
FDs offer flexible investment tenures ranging from a few months to several years. This definitely makes them a popular investment option for those looking to meet their financial goals in the short or long term.
● Easy to Invest
It is a simple and straightforward process to invest in an FD. One can easily download the right application and just avail this facility with a few taps. The documentation, too, is very minimal.
What are the different types of Fixed Deposit Calculators and their uses?
A Simple FD calculator is the most basic type of calculator as it calculates the interest amount earned on an investment. It is based on the principal amount, investment duration and the interest rate the bank/financial institution offers.
This type of calculator calculates the interest earned on a fixed deposit investment based on the principal amount, duration of the investment, rate of interest and the frequency of interest compounding.
3. Maturity calculator
This type of calculator helps determine the maturity value of the fd investment. It calculates the total amount you will receive at the end of the fixed deposit tenure, including the amount of principal and the interest earned.
4. Tax Saving FD
This calculator is used to calculate the tax savings on an FD investment. It considers the tax benefits available on investments made in saving fixed deposits and helps determine the final amount after tax deductions.