# Fixed Deposit (FD) Calculator

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342 Last Updated on July 21, 2023 by asifa

A fixed deposit (FD) is a type of financial instrument offered primarily by banks and non-banking financial companies (NBFC). A fixed deposit has a flexible duration and a predetermined rate of interest. Individuals will always earn the predetermined rate of interest on their FD investment calculated by FD calculator, regardless of market fluctuations. Individuals can invest for terms of between seven days and ten years, or even more, depending on the bank.

## What Is The FD Calculator?

The fixed deposit calculator assists an investor in estimating the FD maturity amount for a fixed duration. Before making an investment, they can estimate the interest income by using an FD calculator. The FD calculator requires the investment amount, current interest rate, and duration as inputs. As an output, it provides the wealth gained and the maturity amount.

## How To Use Kuvera’s FD Calculator For Fixed Deposits?

Prior to making an investment, it is crucial for an investor to have a solid understanding of the expected return. This will determine whether the selected investment option will serve the investor’s financial objectives at maturity.

To use the FD calculator, follow the steps stated below:

• Enter the deposit amount in the first field (Total investment)
• Enter the interest rate in the next field (Rate of interest)
• Enter the tenure duration (Time period)

## Fixed Deposit Calculation Formula

The rate of interest on a bank’s fixed deposit is predetermined at the time the investment is made. Additionally, it remains constant throughout the investment period. The following variables might influence the interest rates on fixed deposits:

First, the duration of the investment is a factor that affects the interest rate; the longer an investor remains invested, the higher the interest rate will be. The interest rate for senior citizens is generally 0.25% to 0.75% higher than the standard rate. This interest rate is referred to as a preferential interest rate. The age that should be considered when determining a senior citizen varies from bank to bank. Few of them consider 60 years, whereas some banks consider 55 years or so.

The current economic situation is also a direct determining factor. When determining interest rates, financial institutions and banks consider economic conditions such as the repo rate and the inflation rate.

Lastly, there are two ways to calculate the interest on a fixed deposit: simple interest and compound interest.

1. Simple Interest on Fixed Deposit

Simple interest is the interest earned on the principal amount invested during the investment period at the predetermined interest rate.

Formula for calculation

Simple Interest: (P * R * T) / 100

P = Principal investment amount

R = Rate of interest (%)

T = Tenure

1. Compound Interest on Fixed Deposit

Compound interest is the interest earned on both the principal and interest earned. The number of periods (years) for which the interest will be compounded and multiplied by the principal amount invested is multiplied by the interest rate.

Compound Interest Calculation Formula

A = P (1+r/n) ^ (n * t)

A = Amount at Maturity

P = Principal investment amount

r = Rate of Interest

n = number of compounding in a year

t = number of years

## Benefits Of Using A Fixed Deposit Calculator

Investing in any scheme is a decision that should only be made after extensive analysis and research. The investment strategy must meet the investment goals. Individuals must use a calculator to determine whether the investment strategy meets their investment objectives. In this way, they will not only make an informed decision but will also avoid any disappointments or unpleasant surprises. Once investors have a financial objective in mind, they can also choose an investment option. Kuvera provides an online FD calculator that is both simple and effective to assist with investment decisions.

1. A fixed deposit calculator allows users to compare the various fixed deposits offered by banks. Due to the fact that each bank and NBFC offer different interest rates, a comparison will allow them to maximise the investment. Due to the fact that each bank and NBFC offer different interest rates, a comparison will allow them to maximise the investment.
2. Investors can invest in a fixed deposit with a variable term ranging from 7 days to 10 years and so on. They can adjust the calculator to determine which FD period will allow them to achieve the desired outcome.
3. Similarly, the compounding period, or payout period, of the fixed deposit can be modified. Since the FD offers compounded interest rates, investors should be aware of the best compounding period for the payout period.

Investors can perform their calculations and analysis in two ways, based on the investment amount or the target amount. Under the investment amount approach, they have a specific investment amount in mind and wish to determine the maturity date and wealth gained. Using the target amount approach, investors conduct the analysis in reverse. Here, investors know how much they need at the end of the FD term and get the amount to be invested as an output.

Apart from that, if you are interested to know about Fixed Deposit as a Safest Investment then visit our Finance category.