Amid market volatility, FDs stand tall when other investment instruments fail to deliver expected results. A Fixed Deposit is not fazed by market fluctuations. The applicable interest rate when the FD is booked remains unchanged throughout the entire tenure until maturity Gone are the days when customers had to sit down for hours comparing various FDs to ascertain their earnings at the end. Now, an FD compound interest calculator can help maximize your earnings through your investment and chart out an ideal timeframe for you to go about it.
How To Use An FD Compound Interest Calculator?
Using an FD calculator is easy. Here is a step-by-step guide on it:
Step 1: Head over to the official website or mobile app of the bank you are planning to open a fixed deposit with
Step 2: Enter the Deposit details, like tenure, total amount, and start and ending date.
Step 3: You will instantly get the results of your investment
After this, you can change the facts and figures to find your ideal investment option.
What are the advantages of using an FD interest calculator?
Using an FD interest calculator is not a hassle, and it also comes with many advantages.
It provides accurate results
The most significant advantage of using an online calculator like this is that it offers almost accurate results. Doing a compound interest calculation manually leaves scope for errors, which you can eliminate by using this device. Moreover, you get correct information even to the decimal point, making it easy to plan your investments.
Using an FD interest calculator saves time
Using an FD interest calculator saves much time you would otherwise spend computing it manually. As you enter the details, you will receive the final result side by side in real time.
The process of calculation becomes simple
Everybody has admitted that the calculation process takes all the fun out of the investment. Calculating the interest rate is a complicated process that involves multiple variables. An FD calculator helps get accurate answers at the click of a button.
You can compare which FD suits you more
Another advantage of using this financial tool is comparing different FD plans before opting for one. Here, you can enter the details of various FD offers and see how the final result changes. Hence, you will have more information to make a decision.
Why should you invest in compound interest fixed deposits?
The answer is simple, to earn the best return on your investment. Since the compounding method generates more interest than simple interest, it is much more beneficial. Here is an example to help you better understand the concept.
Suppose you invest Rs.50,000 in an FD for 5 years at a 10% interest rate. The following table will demonstrate how your investment will progress.
Benefits Of Investing In An FD
Here are some notable benefits of investing in an FD.
Return is guaranteed
The most significant benefit of a fixed deposit is its investment guarantee. Since this is one of the few investment options unaffected by the market’s movement, your investment remains secure.
To explain it further, even if the interest rates go down or the market is not performing, you will continue to receive the max interest rate on the FD – the same as when you booked the FD. Therefore, the amount you estimate to earn from it will not change.
Offers ample flexibility
Flexibility in investment and withdrawal is another benefit of this financial product. To begin with, you can invest in an FD with as low as Rs.1000, and there is no threshold on the upper limit, making an FD investment accessible to everyone.
Adding to that is the liberty of selecting the investment tenure. You can invest for as low as 7 days and as high as 10 years. So, choose a term as per your requirement.
Furthermore, the flexibility in withdrawing funds also needs a special mention here. You can get the amount in any financial emergency by paying a small penalty.
It can be used as collateral
In case you do not want to break your FD investments, you can always use it as collateral to avail of a loan. Banks extend loans against the value of the deposit, which you can use to meet any requirements that you may have, at interest rates lower than those you’d get on unsecured loans. Apart from these, other advantages of investing in an FD includes the income tax benefit that you get. You can save up to Rs.1.5 lakh in income tax deductions with a tax-saving FD.
Conclusion
An FD calculator is an easy and effective tool for calculating fixed returns and planning your finances in advance. Furthermore, with all the information from this online tool, you can easily compare different FD plans and find one that meets your goals.
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