Investment is not an expense, it’s safekeeping your money so that you can use it in the future. As financial strength is of utmost importance in today’s world, you need to have a saving corpus you can depend on for all your needs.
When it comes to building a sizeable savings fund, you have to make investments in saving schemes. The benefit of a savings scheme is that it gives you back more than you invested.
One such saving scheme is a Fixed Deposit. You can use a fixed deposit calculator to your advantage if you are planning to invest in Fixed deposits.
Before we tell you the advantages, let’s brush our Fixed Deposit basics:
What is a Fixed Deposit?
A Fixed Deposit is a savings tool offered by several banks and Non-Banking Financial Companies. The deposit made in the saving instrument is subject to high-interest rates. The deposited amount in Fixed Deposit is not allowed to be withdrawn for a predetermined period. This predetermined period can vary anywhere from 7 days to 10 years, depending on the bank, and the term chosen by the individual.
The interest earned on a fixed deposit is unaffected by market fluctuations. In other words, even if the market is downhill, you earn guaranteed returns. It is, for this reason, a fixed deposit is considered the safest saving option.
You can calculate your return through a Fixed Deposit Calculator.
What is a Fixed Deposit Calculator and How Does it Work?
Calculating returns on investment is an essential aspect of financial planning. But calculating the amount, along with the deposited amount and interest earned on the deposit is a complicated task. This is where a fixed deposit investment calculator comes to your rescue by calculating the maturity amount without any errors and confusion.
A fixed deposit calculator uses an algorithm to calculate the return on a fixed deposit There are two types of Fixed Deposit – compound interest FD and simple interest FD. The fixed deposit investment calculator calculates the amount based on these formulas.
- Simple Interest Fixed Deposit Formula
M = P + (P x R x T/ 100)
P = Amount Deposited
R = Rate of Interest
T = Tenure (in years)
- Compound Interest Deposit Formula
A = P (1+r/n) ^ (nt)
A = Amount at Maturity
P= amount deposited/ Principal amount
R= Interest Rate
T =Investment Tenure (in years)
Benefits of Using a Fixed Deposit Calculator
A Fixed Deposit investment calculator can be useful if you are planning to invest in Fixed Deposit. Here are the many benefits of using a fixed deposit calculator:
1. Easy to Use:
A fixed deposit investment calculator is extremely easy to use. All you have to do is enter the necessary information to get the results. The information that you need to enter includes the amount deposited, investment tenure and interest rate. Once that is done, you get the maturity amount in seconds.
2. Free of Errors:
Manual calculation of the maturity amount for Fixed Deposit can be subject to numerous calculation errors. This is where a fixed deposit calculator can be beneficial. Using a fixed deposit calculator eliminates the possibility of calculation mistakes and errors.
3. Supports Financial Planning:
A fixed deposit calculator can be highly beneficial for your financial planning. Knowing how much money you’d accumulate at maturity can help you make investment and purchasing decisions. You can also figure out if the maturity amount you’d be getting is sufficient or not. If it’s not, you can further plan your investments to grow your money to generate sizeable savings.
4. Free of Complex Calculations:
Calculation of the amount accumulated on maturity involves numerous calculations. For those of us who don’t consider mathematics and calculation to be a strong suit, can benefit from a fixed deposit calculator. As you are only required to enter information related to the amount invested, interest rate and tenure, a fixed deposit calculator does the work of estimating the maturity amount for you.
5. Facilitates Comparison:
If you are confused about which Fixed Deposit scheme is the best to invest in, a fixed deposit calculator can help you as it can be utilized to compare the multiple types of fixed deposit schemes. On the plus side, as different banks offer different fixed deposit interest rates, you can choose the one that gives you the highest return with the help of a fixed deposit calculator.
You can visit Investment Simplified to know more about fixed deposits, calculate your returns or get answers for any other investment-related concerns you may have.
Conclusion
A Fixed Deposit is an ideal investment cum saving tool if you wish to make safe and secure investments, without any risk. You can make use of a Fixed deposit calculator to make your work easier. It’s easy to use and offers error-free calculations.
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