# HOW TO USE A FIXED DEPOSIT CALCULATOR

Investing in fixed deposits is a popular financial choice. This is because FDs offer a higher rate of interest than savings accounts, along with flexible tenures. They are considered to be safe investment options. A fixed deposit calculator is a financial instrument offered by various banks and online portals like MyLoanCare.in and helps in calculating the final amount at the time of maturity as well as the interest earned. It takes into account the principal amount, tenure and the rate of interest applicable. Since a lot of different factors play a role in the calculation, it is difficult to manually calculate the interest earned and the final amount at maturity. This is where a Fixed Deposit calculator comes into play.

Factors Considered:

1. Principal Deposit Amount: This is the initial amount that you use to invest. If you increase your principal amount, then the amount that you receive on maturity increases, however, if the same is reduced, the amount received also reduces.
2. Rate of Interest: The interest rate applicable on a fixed deposit varies according to schemes and from bank to bank. The interest rate for FDs of different tenures is also different. If the rate of interest increases, then your interest amount also increases, at the same time, if your rate of interest decreases the interest amount that you receive also decreases.
3. Tenure: This means the period for which you are planning to invest your money. Withdrawing your money before the date of maturity may result in a penalty. Fixed deposits made for more prolonged durations would fetch you higher maturity returns in comparison to those made for smaller tenures.
4. The frequency of compound interest: The compound interest can be applied monthly, quarterly, semi-annually and annually. The frequency with which the compound interest is applied also affects the final amount received on the date of maturity.

Working:

A fixed deposit calculator is primarily designed to meet consumer specifications and to provide all the relevant information. All you need to do is to enter the required information, and the calculator will automatically display your amount with utmost precision and accuracy.

Example:

Let’s suppose the principal amount to be Rs. 1 lakh

The rate of interest to be 5%

The tenure to be 2 years

Then,

Your maturity amount would be Rs. 1,10,494

Your interest amount would be Rs. 10,494.

The interest here is compounded quarterly.

Benefits of using Fixed Deposit Calculator

1. Unmatched Accuracy: The results given by a fixed deposit calculator are precise. The level of accuracy that a calculator has cannot be matched by hand.
2. Facilitates informed decisions: It is wise to use the fixed deposit calculator to know about the returns before investing in any fixed deposit scheme.
3. Allows you to strategize: Since fixed deposits are safe investments and the calculator gives you the exact amount that you would receive after your chosen tenure, it enables you to plan your other financial obligations and choices accordingly.
4. Easy Access: A fixed deposit calculator is readily available online. A simple google search will lead you to several pages offering free services of a fixed deposit calculator.

Using a fixed deposit calculator is a wise decision. It is highly recommended that you use it before making any investment decisions. Previous post Early Learning – To Build a Strong Bond With Your Child