FD Calculator

What is a fixed deposit investment?

Fixed Deposits is an investment avenue that lets
investors park their funds for a long duration. At the end of the
investment tenure, the investor can get interest earnings combined
with the original principal amount invested. The interest rate on
FDs may remain the same or fluctuate depending on rate changes
announced by banks. Fixed deposits also come with varying tenures
that can range anywhere from 7 days to 10 years.

Investors can fetch higher returns through FDs as
compared to keeping the same amount of funds in savings bank
accounts.

How does a FD calculator work?

A FD calculator helps in estimating the FD investment
maturity amount at the end of the investment tenure. The calculator
takes into account deposit amount and interest rate as selected by
the investor while calculating investment returns.

Fisdom’s FD calculator has two-fold features:

1. Investors can use it to estimate returns from the investment
2. The other feature helps investors to perform backward
   calculation for estimating the investment amount and tenure by
   entering target returns

The FD calculator also provides accurate interest
earnings that can be generated from a fixed deposit investment. Here
are the key aspects that the FD calculator incorporates to calculate
FD returns or maturity amount:

1. FD deposit amount
2. Interest rate
3. Tenure of investment

Maturity amount is paid out at the end of the FD tenure.
This amount is made up of the total interest earnings and the
principal (original deposit amount).

Steps for using Fisdom’s FD calculator

1. Investment amount

Follow the below-mentioned steps to calculate investment
amount with Fisdom’s FD calculator:

1. Input the amount that you want to invest in the first slot of
   the calculator
2. Next, enter the interest rate that is being offered by the bank
   where FD is to be opened
3. Lastly, enter the targeted investment duration for which you
   want to maintain the FD. This can be anywhere between 1-30
   years.

Once these values are entered, the calculator will automatically
reflect the maturity value in the right-hand side section of the
tool. It will also show a bar comparing the original investment
amount against maturity value for comparison purposes.

2. Target amount

Here are the steps to be followed for calculating the
investment amount needed to achieve a target amount from an FD
investment.

1. Enter the target amount that you wish to achieve as per your
   financial goals
2. Plug in the ongoing interest rate or rate offered by the
   selected bank
3. Enter the duration that you wish to invest for as per your
   goals.

The calculator will automatically throw up the required
investment amount for achieving the target amount entered by you. It
will also show a comparison between the investment and target
amounts for easier reference of estimated growth.

Why is FD calculator beneficial for investors?

Whenever an investor selects one investment option over
another, he/she should know the benefits and risks attached to the
investment. While FD investments are known to be risk free and these
offer guaranteed returns, one must know the exact quantum of returns
along with other associated factors that will impact the returns.

Instead of manually calculating returns by taking into account the
influencing factors, it is ideal to make use of an FD calculator.
With the help of an FD calculator, an investor can also make
comparisons across different FD schemes and offerings by banks.
This, in turn, helps in estimating which scheme works best in the
investor’s favour.

Here are some of the other benefits that can be availed from an FD
calculator:

1. Error free calculations
2. Helps in saving time and effort as one can avoid the hassle of
   manual calculations using multiple tenures, different amounts
   and various interest rates
3. The tool is available for free and one can use it as many times
   as one likes.

Additional read – Why do Indians prefer to invest in FD than
MFs or equities

What are the Income tax implications on Fixed
Deposit earnings?

The main earning from a fixed deposit investment is the
interest component. Interest earnings are considered as part of the
total income of the investor and are therefore taxed as per the
applicable income tax slab rate.

Banks deduct TDS on FD interest in case the amount
exceeds Rs. 40,000/- in a FD account during a financial year.
Investors who have not shared their PAN details with the bank may
see a TDS of 20%. Companies deduct TDS on FD interest at 10% in case
the interest earnings during a financial year are above Rs. 5,000/-.
Interest earned on any kind of FD is taxable at the slab rate of the
investor.

Most banks offer tax-saving FDs that can help in bringing
down the taxable income of the investor. Investors can invest up to
Rs. 1.5 lakh in a tax-saving fixed deposit and this amount can be
availed as deductions u/s 80C of the Income Tax Act, 1961. However,
these FDs have a lock-in period of 5 years and do not allow
premature withdrawals except in case of untimely death of the
investor.

Conclusion

FD calculator is an ideal tool for new-age investors who
have a portfolio of various investments that require constant
tracking. Instead of relying on manual and time-consuming
calculation processes, it is smarter to use an FD calculator while
estimating returns on the investment.