Calculating FD interest for different tenures: Short-term vs long-term deposits

When it comes to investment, it depends on the investor whether it should be a short one or a long one. The prime factor that affects tenure is the ultimate goal. When it comes to safe and sound investment schemes, one of the best is Fixed Deposit. However, the Fixed Deposit Interest Rate in India is quite lucrative, pulling more and more people towards it. 

The short-term investments are less risky, but on the other hand, they are not able to offer good returns than long-term investments. Meanwhile, long-term investments are held for an extended time period, generally several years or even decades. Therefore, they are usually more volatile and offer higher returns than short-term investments! 

What is a fixed deposit?

It is a financial investment offered by financial institutions/banks in India where a potential investor can deposit a lump sum of money for a fixed period of time at a predetermined rate of interest. The rate of interest on such investment schemes is typically higher than that offered on savings accounts. 

This ultimately makes them an attractive option for people who want to earn a higher return on their savings. FDs in India can be opened for various tenures. Surprisingly, it can range from as short as seven days to as long as ten years. Moreover, as a potential investor, you need to keep in mind that the rate of interest remains constant for the entire tenure. 

What is a fixed deposit calculator? 

An FD calculator is a financial tool that helps a potential investor calculate interest earned on your FD investment over a particular period. It is an online tool financial institutions/banks provide via their applications. It allows the investors to calculate the interest earned on their FD investment, investment’s maturity value, and the total interest amount earned over the investment period.   

Such tools require certain inputs such as principal amount, investment tenure, and the rate of interest offered by the financial institution. Once the details are entered, the calculator provides an estimate of the interest amount earned and the maturity value of the investment. 

How does an FD interest calculator work?

Well, it totally depends on which platform you use. Nowadays, there is no need to open your laptop and search for the same on the web. Instead, it’s all about downloading the right application on your internet-enabled smartphone. 

In my personal experience, I’ve used the calculator offered by the Bajaj Finserv application. Believe me, they have built such a simple tool that you just have to enter a few details, and it gives you the result within a blink of an eye. 

Here is a step-by-step guide on how to use a FD calculator:

  1. Download the Bajaj Finserv app from the App Store or Play Store.
  2. Sign up after entering your mobile number
  3. Log in
  4. On the home page, tap on three bars situated on the top right. 
  5. Here, you’ll see ‘Calculators & Buying Guides.’ 
  6. Go to ‘Deposits Calculators’
  7. Choose ‘Fixed Deposit Interest Calculator’.
  8. Fill in the required details
  9. Experiment as per your requirement.