A fixed deposit, often known as an FD, is a type of investment that banks and non-banking financial organizations (NBFCs) give to their customers to help them save money. An FD account allows you to invest a large sum of money for a set length of time at a specified interest rate. You receive the lump sum payment, plus interest, at the end of the term, which is an excellent money-saving strategy. Fixed deposit accounts come with a variety of interest rates.
You can choose a fixed deposit for a period ranging from 7 to 10 years. This is why a term deposit is sometimes known as an FD. When you open a fixed deposit account with a specific interest rate, you commit to that rate. Depending on your preference, the interest you earn is regularly paid at maturity. You are not permitted to withdraw the funds before the maturity date. You will be charged a penalty must deliver the penalty if you wish to do so.
Characteristics of a Fixed Deposit
To understand what a fixed deposit is, you must first understand its primary characteristics. The following are the most important:
1. Guaranteed Profits
A fixed deposit’s returns are guaranteed. You will receive the same rate of return agreed upon when the FD was opened. This is not the case with market-led investments, which provide returns depending on market interest rate swings. Even if interest rates fall, you will receive the same rate of interest that was agreed upon. As a result, the fixed deposit is more secure than other investments.
2. Interest Rates
A fixed deposit’s interest rate fluctuates depending on the term you choose. The interest rate, on the other hand, is fixed.
3. Provides a variety of tenure options
The Bank offers FDs with terms ranging from 8 days to 10 years.
4. Investment Return
The FD’s maturity duration or tenure determines the amount of interest you earn on a fixed deposit. You will earn a greater interest rate if you have a longer-term. Furthermore, the rate of return on your investment is determined by whether you choose to receive interest regularly or reinvest it.
5. Loan secured by a certificate of deposit
You can take out a loan against your fixed deposit if you need money right away. This prevents your FD from being closed prematurely.
What is a fixed deposit calculator?
An investor can use the fixed deposit calculator to predict the amount of money due at the end of a set period. Before investing, you can estimate the interest income with the help of an FD calculator. The investment amount, current interest rate, and tenure are all inputs into the FD calculator. It delivers the amount of money gained and the maturity amount as an output.
The fixed deposit calculator merely estimates wealth gained and makes no guarantees or claims about the amount calculated based on the specified inputs. It is critical for an investor to know the projected amount ahead of time and before investing. This will determine whether the chosen investment option will meet the investor’s financial goals at maturity or not.
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