According to recent reports, fixed deposits received the highest return on investment in FY2018, outperforming equity and debt funds. FDs have remained a go-to option for individuals seeking risk-free alternatives to market investments. As financial institutions introduce various FD schemes, investors across different profiles including HUFs, NRIs, etc. are opting for these types of term deposits.
However, deciding on a suitable FD depends on applicable rates and other features that are offered by the financial institution. Therefore, investors investing in these schemes must compare the returns earned with the help of a fixed deposit calculator and also consider other features to identify the most beneficial FD scheme.
As interest earned is the primary concern for investors deciding to put their money in fixed deposits, it is necessary to understand all the aspects of its calculations and make an informed decision afterwards. Fixed deposit calculators are financial tools that are used in this computation. So, let’s first have a better look at how these calculators work.
Fixed deposit calculator – An overview
FD calculators are online tools provided by financial institutions that allow investors to estimate the return they can earn through various FD schemes. Individuals can also compare schemes offered by different lenders as per different fixed deposit rates.
The calculator accurately computes the probable asset appreciation for an investor. Its result is dependent on three variables, which are as follows.
- Type of investor.
- Investment amount.
- Tenor of investment.
Based on these factors, an FD calculator provides three specific results that include –
- The maturity amount (Including both principal and interest).
- Interest payouts.
- Maturity date of your fixed deposit.
The fixed deposit calculator can be of immense help in identifying a suitable FD scheme. However, as these schemes are available in two variants depending on method of interest calculation, you must also have an in-depth understanding of interest payout methods used to decide the result.
Interest payouts for cumulative and non-cumulative FD –
When computing interest payouts of an investment amount, the fixed deposit calculator shows two separate results as per the types of FDs, namely –
- Cumulative FD
- Non-cumulative FD
The primary points of difference between these two types of FDs are –
- Interest calculation differs.
- Payouts of interest vary.
Cumulative fixed deposit’s interest is calculated annually and its payouts occur only at the time of maturity. In the case of non-cumulative fixed deposits, however, interest is calculated periodically, and payouts occur as per a pre-determined period. Investors have an option to select periodic payments availability from monthly, quarterly, semi-annually and annual intervals.
Fixed deposit rates applicable for non-cumulative deposits depend on the period you have chosen for interest payments. Periodic interest payments made annually attract the highest returns, and those made monthly attract the lowest.
It is easy to compare which option can fetch you the highest returns with the help of a fixed deposit calculator and proceed accordingly.
You must, however, make sure that you go forward with the best financial institution when making such investment to ensure you enjoy the highest returns against your investment. Certain reputed NBFCs like Bajaj Finance also offer additional features like multiple deposit facility, tenor flexibility, etc., along with their attractive fixed deposit interest rates for their customers, ensuring the highest returns against their invested corpus.
Now that you have the required information regarding the best rates on FD and fixed deposit calculator take a look at how you can use this tool for the calculation of returns on savings.
Know how to calculate returns on your saved amount:
Calculating returns on the saved amount is reasonably easy with the help of online fixed deposit calculators. Follow the steps given below to calculate your returns.
1. Choose your customer type from given options like existing or new customers, senior citizens, etc.
2. Select FD type, i.e. non-cumulative or cumulative.
3. Enter the amount you want to invest.
4. Provide a preferred tenor.
Once entered, the calculator will display the maturity amount as well as the interest payouts along and maturity date.
With these details, you can now proceed to find the best savings scheme in India as per your risk profile. Before applying, check the eligibility requirement of your financial institution for hassle-free investment.
Gaurav Khanna is an experienced financial advisor, digital marketer, and writer who is well known for his ability to predict market trends. Check out his blog at HighlightStory