Benefits of using the FD calculator

by Giselle Lobo Writer & Blogger

Fixed Deposits, or FDs are the financial schemes that are offered by banks, NBFCs, and post offices. They are opposite to the investment options such as stocks, bonds, etc. which you invest by demat account opening online and can provide market-linked returns.

You will get the fixed return in FD and invest the amount at once for a certain period which can be as low as 7 days to as high as 10 years. However, the interest rates can vary for different periods of investment and you will get the benefit of the power of compounding. In this article, we’ll see how you can use the FD calculator to know the returns beforehand.

Steps to Use the FD Calculator

With the FD calculator, you can estimate the maturity amount you can earn in a certain period. You will know how much income you can earn before investing any money into it. It takes the input values of the investment amount, rate of interest, time period, and compounding frequency. It gives the output values of total interest and total value.

Here are the steps to use the FD calculator:

Firstly, enter the investment amount and suppose it is ₹1 lakh.
After that, enter the rate of interest and suppose it is 6.5%.
Select the time period of investment and suppose it is 5 years.
Select the compounding frequency which is the frequency of interest you can earn in a year and suppose it is yearly.

The values returned by the FD calculator are:

The investment amount is the total amount that you have invested which is ₹1,00,000.
The total interest is the amount of return that you can earn which is ₹37,009.
The total value is the summation of the invested amount and the interest earnings which is ₹1,37,009.

Benefits of Using the FD Calculator

FD calculator helps you compare different FDs offered by banks and NBFCs because each bank provides different interest rates. The interest rates are higher for senior citizen FDs than the general ones.
You can know the time period of investment based on how much you want to earn because the FDs come in different durations.
You can change the compounding frequency which can be yearly, quarterly, or monthly in order to know the actual return which is otherwise difficult to calculate using the compound interest formula.
FD calculator is a free tool that provides accurate results and can be used by anyone who doesn’t have any knowledge of how interest rates and investment amounts are calculated.
You can also get different recommendations from various banks from the website of the FD calculator based on the interest rates and investment period.
The interest rates offered by banks on FDs are already fixed before making the investment and remain the same throughout the investment period. Hence, with the usage of an FD calculator, there is no chance of miscalculation and changing results over a period of time.

Conclusion

Therefore, you can use the FD calculator to know the investment amount and investment period which is ideal for you. You can make strong financial plans with the full information in hand because FDs' interest rates will not fluctuate. You will be able to know how much you want to invest in FD and how much in market-linked instruments.