It’s easier to select an investment plan when you have your financial goals crystal clear. If you are an investor who values investment security more than returns or is someone who is looking to adjust the level of risk in their portfolio by investing in a secure scheme, a fixed deposit is the answer.
Fixed deposit is a fixed-pay-out savings scheme that multiplies an investor’s wealth through compound interest. This savings scheme calls for a lump-sum deposit and offers a fixed interest rate yearly throughout the investment tenure.
As a fixed deposit scheme is offered by numerous banks and non-banking finance companies, it can become challenging to choose which FD account to select. This is where a fixed deposit interest calculator comes in. It helps you compare different FD accounts.
Let us understand how:
How Does a Fixed Deposit Interest Calculator Help in Comparison
A fixed deposit interest calculator is a digital tool that calculates the amount a fixed deposit account will accumulate at the end of the investment tenure. The maturity amount depends on the principal investment amount, investment tenure and the interest rate. While the subscriber or the investor decides the investment tenure and principal investment amount, the interest rate is determined by the bank. Different banks offer different interest rates.
You can utilize a fixed deposit interest calculator to calculate the maturity amount and decide which bank to go for. Ideally, the bank that offers you a higher interest rate should be your choice. However, there are other factors that drive that decision. We will be talking about them in a while.
Before we do that, let us take a moment to discuss why you should be using a fixed deposit interest calculator and how to use it.
Benefits of Using a Fixed Deposit Interest Calculator
A fixed deposit interest calculator offers numerous benefits. Here are some of them:
- Easy to Use
A fixed deposit interest calculator comes with a simple interface, making the tool extremely easy to use. All you need to do is put the required details, such as an investment amount, investment tenure and interest rate. Once these details are entered, a fixed deposit interest calculator will display the maturity amount in a matter of seconds.
- Saves Time
The manual calculation of the maturity amount can be time-consuming because of the complexities. However, you can use a fixed deposit interest calculator to save time. Once the values are entered, the tool shows the results in a jiffy. You can use the saved time to concentrate on the essential things in life.
- Saves you From Complex Calculations
The maturity amount can be calculated using a fixed deposit formula.
M= P + P {(1 + i/100) t – 1},
Where,
M is the maturity amount,
P = Principal amount of investment
I = Interest Rate
T = Investment tenure
As you can see, the calculation can be complex and subject to errors and mistakes; a fixed deposit interest calculator can make your work easy by saving you from the hassle and headache of complex calculations.
- Free to Use
A fixed deposit interest calculator is free to use. You can use it indefinitely without requiring you to pay anything.
Other Significant Parameters for Comparison
Apart from investment amount, tenure and interest rate, other essential parameters drive your decision-making. Here are some of them:
- Withdrawal Rules:
A fixed deposit offers limited flexibility when it comes to withdrawals. Pre-mature withdrawals are often restricted and usually come with penalty fees. Choosing a bank or NBFC provides greater flexibility when it comes to pre-mature withdrawals is advisable. Before opening a fixed deposit account, ensure you are enlightened about the withdrawal rules.
- Bank Reputation:
Bank reputation is an essential parameter. Even though a fixed deposit account offers investment safety and guaranteed returns, it doesn’t mean it is 100% risk-free. A bank going through financial struggles is a risk. That is why it is essential to choose a reputable bank that is financially strong and has a good reputation for offering best-in-class service.
The Bottom Line:
A fixed deposit interest calculator is an excellent tool that can help you compare various fixed deposit accounts and choose the best one that meets your requirements! Now that you know how to compare various fixed deposit accounts, you can proceed with the selection!
So, go on, select the fixed deposit interest calculator of your choice and make financial planning easier than ever!
