A fixed deposit calculator is an online tool that can be used for calculating the interest and the amount that the investor will receive when the FD matures. This FD can be of duration varying from 7 days to 10 years. Before we understand the basics of a fixed deposit calculator, it is important to know what exactly is fixed deposit, its types, and the advantages of investing in FD.
FD is basically an investment which is done for a fixed duration. The money can be invested in FD from a minimum period of 7 days to 10 years at a stretch. The advantage of investing in FD is that the investor is likely to earn a better and higher interest in comparison to a savings account.
Types of FD
FD can be categorized into two segments:
- Cumulative
- Non-Cumulative
Cumulative FD
This FD is known to offer compounded interest on a quarterly or yearly basis. This interest amount is payable at the maturity period. It offers a higher rate of interest and is most suited for people who are looking at the growth of their savings at a faster pace.
Non-Cumulative FD
This FD is different in the way that it offers interest on a monthly, quarterly, half-yearly, or annual basis, which is done as per the choice of the person who has invested. This scheme offers a low rate of interest and is suitable for someone who wants regular income from the savings.
FD Calculator
Knowing the worth of your money by investing the same in FD is now possible from the comfort of your home also. FD calculator can do the trick for you and that too in a moment. Of all the FD calculators that are available online, almost all ask for only a few basic details to be entered, like amount and tenure.
Inputs required in the FD calculator
Fixed Deposit Amount – The investor can choose an amount of their liking with the minimum amount specified by the back concerned.
Rate of interest – This can be checked from the website of the bank in which you intend to invest. This amount will vary with the amount deposited and the term for which this investment is being made.
Tenure duration- Most banks offer flexible tenure durations, which vary from 7 days to 10 years.
How does the FD calculator work?
Once all these details are entered, the FD calculator will show the amount that you will earn from this deposit. This maturity amount is calculated based on the details that have entered. This tool is indeed a time savior and can be used endlessly by trying different investment figures.
The use of FD calculator helps the investor to be adequately prepared before they decide to invest as they would be well aware of the benefits they are likely to make from such an investment. All said and done, investing through FD is intelligent thinking and will help you accumulate a substantial amount if you make it a habit to invest this way.