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Understanding Your Fixed Deposit (FD) Returns

A Fixed Deposit (FD) is a popular investment instrument offered by banks and financial institutions where you deposit a lump sum of money for a predetermined period (tenure) at a fixed interest rate. Our FD Calculator helps you estimate the maturity amount and the total interest you'll earn on your investment.

💰 How to Use the FD Calculator

To calculate your FD returns:

1. Enter Principal Amount: Input the initial sum you plan to invest in the FD.
2. Enter Annual Interest Rate (%): Provide the yearly interest rate offered by the bank for the FD.
3. Enter Investment Tenure: Specify the duration for which you want to keep the deposit. You can enter the value and select the unit (Years, Months, or Days).
4. Select Compounding Frequency: Choose how often the interest is compounded (e.g., Monthly, Quarterly, Half-Yearly, Annually). This significantly impacts the total interest earned.
5. Calculate: Click the "Calculate FD Maturity" button.

The calculator will display the "Principal Invested," "Total Interest Earned," and the final "Maturity Amount."

📈 The Calculation Logic (Compound Interest)

Fixed Deposits typically earn compound interest. The formula used to calculate the maturity amount (A) is:

A = P (1 + r/n)nt

Where:

• A = Maturity Amount
• P = Principal Amount (initial investment)
• r = Annual interest rate (in decimal form, e.g., 7% = 0.07)
• n = Number of times interest is compounded per year (e.g., 4 for quarterly, 1 for annually)
• t = Tenure of the investment in years

The Total Interest Earned is then calculated as: Total Interest = A - P.

💡 Frequently Asked Questions (FAQ)

What is the difference between an FD and a regular savings account?

An FD locks your money for a fixed period at a fixed interest rate, which is typically higher than a regular savings account. Savings accounts offer lower interest rates but provide the flexibility to withdraw money at any time.

How does compounding frequency affect my FD returns?

More frequent compounding (e.g., quarterly vs. annually) results in slightly higher returns because your interest starts earning its own interest sooner within the year. The effect is more noticeable over longer tenures.

Note: Some banks might offer simple interest for FDs with tenures less than a certain period (e.g., 6 months). This calculator currently assumes compound interest as per the selected frequency.