FIXED DEPOSIT INVESTMENT CALCULATOR- HOW DOES IT WORK?

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For the calculation of a fixed deposit investment, the formula is based on the interest rates and compounding frequency. This is an online tool, which helps one understand the amount of interest he/she might receive for a fixed amount on the given interest rates.

A fixed deposit investment calculator is beneficial for the customers, as before investing in any bank one can see for himself the amount he will receive. This makes one browse and choose better investment options.

With a number of banks providing different interest rates, it is easier for the customer to invest. One can compare a number of banks’ interest rates and fill it in the formula and calculate the amount towards maturity. One can choose the amount, the rate of interest provided, and the tenure.

For the calculation, it shows both simple interest and compound interest rates on the principal amount. The factors considered during the calculation are-

Principal Amount: It is the amount one invests, and on which the FD interest rates are applicable. The amount can be as low as Rs. 1,000.

Interest Rate: It may vary from bank to bank and also on the amount one deposits. Amounts of one crore and more may have lower interest rates than amounts less than a crore.

Tenure: It is the time period in which you may decide to deposit the money. The minimum tenure of investment is generally 7-10 years.

Compounding Frequency: This gives the final amount to be received towards maturity.

One can choose the interest from either simple interest or compound interest. For a simple interest on the principal amount, the principal amount will remain the same throughout the tenure and the interest will be calculated on the same. So towards the maturity, the entire principal plus the interest is paid back.

For a compound interest on the principal amount, the interest rate remains the same, though the principal amount changes periodically. So for year one, your principal amount is Rs 1,000 and the interest rate is 10%, the amount at the end of year one is 1100. This amount then becomes the principal for the second year and so on until the maturity. Browse the site for more details.

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