When it comes to safe investment options, people usually trust banks. People are more interested in their savings bank account. But here is another option called a fixed deposit. This is a risk-free, convenient option and associated with the highest interest rates on fd. Kick start your investment and avail secure returns.
What is a Fixed Deposit?
In a Fixed Deposit, you out a certain amount of money into the bank for a certain period of time for a certain interest rate and then, after that specific period, you get a maturity amount, according to the interest rate of the Fixed Deposit. For example, if you fix Rs. 2 lakhs for an interest rate of 3.10%, then you can get a maturity amount of Rs. 2,12,775 at the end of two years. There are a lot of benefits to a Fixed Deposit. The benefits of a Fixed Deposit are as follows:
- A fixed deposit can be both long term and short term. So for those who are willing to invest in a long term plan can certainly opt for it. Apart from that, it keeps the money safe.
- The interest rate of a Fixed Deposit can vary. It can be high or low. If it is low, then it will give you less return, and if it’s a high interest fixed deposit, it shall yield a higher profit. In short, your profit is secured in any case.
You can also reinvest the mature money in another fixed deposit. The formula to calculate the maturity amount is A = P x (1 + r/n)nt and I = A – P where A= maturity value,
P is the Principal amount,
r is the rate of interest,
t is tenure,
n is the frequency of compounded interest and
I is Amount of interest to be earned
So, what is the use of the FD calculator?
While thinking about investing money in FD, you can easily calculate the interest amount. You have to insert all the details of the FD, the principal amount, the interest rate, and the tenure for which you want to fix the money. Put all the information in the calculator, and you will be able to get the profit amount that the FD will generate for you. The most important usage of the FD calculator is while you have to calculate the amount manually, it will calculate the sum automatically. Being a machine-generated calculation, it’s precise. So, there is no chance for a faulty calculation as long as your inputs are perfectly alright. The other important thing is the FD calculator is very easy to use. Even a person who is naive about using a computer can use the FD calculator.
However, remember, the fact that income that is being generated by FD comes under the section of income from other sources according to the IT Act of India and is tax-deductible under 80C of ITA. So, if you are willing to avoid tax deduction on the income of the interest generated by FD, it’s a better option to reinvest the maturity amount in another FD. Also remember, FDs have different rates of interest. So before you invest an amount of money, make a good research and then invest your money in a Fixed Deposit.