Fixed Deposits (FDs) are a secure entity and are the preferred mode of investments of most Indians. And with reason: They guarantee a protection of the principal and yield a regular interest income.

In fact, one can also avail loans against fixed deposits. But before putting the entire investment corpus in FDs, one should always factor in inflation. With inflation running neck and neck with interest rates, it makes sense to compare investments to see what works best. As the adage goes, do not keep all your eggs in one basket.

What is an FD calculator?

Always use a fixed deposit calculator before you out your money in FDs. A fixed deposit calculator is a virtual calculator that allows users to input basic details such as deposit amount, deposit period and interest rate. From this data, it calculates returns on maturity.

This online device gives investors a clear picture on what returns they can expect from their investment. While Fixed Deposit Interest rates are constant over the life of a deposit, they can differ at maturity. Renewals are always done at the interest rate prevailing at maturity. New rates may be higher or lower depending on bank norms. Using the calculator, depositors can compare maturity amounts for scheme renewal versus new scheme.

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Users have to input the following details:

  • Deposit amount: the amount invested in a particular deposit scheme
  • Deposit tenure: the period for which the amount is invested
  • Deposit interest rate: the rate of return offered on a chosen scheme

Once the user punches in the details, they just need to hit ‘calculate’. The result i.e. the maturity amount is automatically, instantly and accurately revealed.

The benefits of using an FD calculator are that it saves time, effort and money. By making real-time calculations, depositors can compare different fixed deposits. They can see where they get the highest returns from.

FD options

Flexible fixed deposit schemes: A flexi fixed deposit is traditionally a combination of a fixed deposit and a recurring/savings account. Customers get the high interest rates offered by fixed deposits. And they have the benefit of liquidity offered by saving accounts.

Demand deposit: A demand deposit is an account from which one can withdraw deposited funds at any time. This is in sharp contrast to a term deposit. Term deposits cannot be liquidated for a predetermined period.

Loans against FDs

Suppose you urgently need money to meet an emergency. You wouldn’t prefer to break your fixed deposit or go for a high interest personal loan. What you can do instead is to opt for a loan against your FD. Most lenders will charge 2-2.5 per cent more interest rate on it, but you can avail 80-90 per cent of the FD sum as loan. The maximum tenure of such loans will be the tenure of FD itself. There are no processing fees. Also, lenders don’t penalise borrowers in case of a foreclosure.

Now, planning for your future doesn’t have to be a daunting experience. To begin with, think about your short, medium and long-term lifestyle and financial goals. Collate information that relates to your existing financial position. It helps to start this planning early. Several products are available in the market today custom-made for various requirements.

Additional Read : How is Fixed Deposit better than any other Investment?

Simply punch those figures in the FD calculator and get started with a fixed deposit or two. Tweak the investments from time to time, ensure that the principal amount doesn’t drain out of your bank and breathe free.

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