Fixed Deposit Interest Rate Calculation
Investments can play an important role in the life of an individual; a profitable investment can even improve your financial condition. It is not necessary that you invest in high-risk sources like mutual funds to get high returns, whereas mutual funds can get you high returns, but at the same, they have the danger of making you lose your invested capital. But then again, there are other options that can get you returns without the risk of losing your invested money. You can invest in options like FDs that can get you numerous benefits.
Fixed Deposits can be beneficial in many ways, the benefits of a Fixed Deposit account are mentioned below:
- Guaranteed Returns: While investing capital in any of the investment sources, the only thing that you might be worried about is the returns. With your capital invested in FDs, you can be guaranteed of the regular returns from your service provider.
- Save on Tax: According to the Section 80C of the Income Tax Act, if you invest an amount around 1.5 lakh in FDs, you will be eligible for tax deduction.
- Safety of the Invested Capital: Let us keep the profit and loss aside; even if the investment proves to be futile, you worry about the invested amount. In fixed deposits, you need not to worry about the invested capital; your service provider will give the entire invested amount at the time of FD maturity.
The benchmark of FD returns is the interest rate. The interest rate provided on FD can determine the amount of money you would gain as returns at the time of maturity. To gain precise numbers you can use the calculator or the manual method to get the interest rate. There are two methods of interest rate calculation that can be used they are: Manual math and online fixed deposit calculator.
- Manual Method: To calculate the interest rate for FDs manually using mathematics, you can refer to this formula.
A = P (1 + r/4/100) ^ (4*n)
A= Represents Maturity amount
P= Represents Deposited Amount
n= Represents tenure
r= Represents interest rate
Using this formula and replacing the variables with numbers, you can get the approximate figures for the amount that you will gain from the invested capital.
- Fixed Deposit Calculator: You can use the online fixed deposit calculator to get more precise and accurate number to determine your return amount. There are various websites that have the online calculator. The online calculator is easy to use and has different User Interface (UI) on different websites that can be used to get better results. Some websites have slides that have integrated numbers, and when the slider is dragged, the numbers move to every point in the slider represents a specific number. Some websites have input boxes, wherein, you can enter the amount and the calculated results. When the numbers for the principal amount, interest rate and tenure are entered, the calculator will give you the output based on the amount you have entered.
Calculating the interest rate can help you monitor the inflow of funds and can be a good help to keep your financial condition on track.