For many investors, fixed deposits (FDs) are the gateway to start building a financial corpus and developing investing discipline. With their guaranteed returns and array of tenors, FDs provide a simple way to grow one’s savings while taking zero risk.
However, picking the right issuer, tenor, deposit amount etc. for maximising FD returns can seem daunting, especially for beginners. This is where online fixed deposit interest calculators come in handy. They let you quickly compute and compare potential earnings across different scenarios at the click of a button.
If you’re new to FDs or have struggled with manual calculations, this beginner’s tutorial will walk you through using an online FD calculator step-by-step.
1. Find a Reliable Calculator
Your first step is to identify a good online calculator from a credible source like a leading bank, NBFC or personal finance app. Many FD calculators are available for free on bank/NBFC websites as well as independent personal finance sites.
Look for a calculator with a clean, user-friendly interface that lets you enter all the key details around your desired FD investment. It should provide the flexibility to compute both lump sum and recurring deposits across varying interest rates, tenors and compounding frequencies (annual, quarterly, monthly etc.)
2. Input the Investment Details
With a calculator shortlisted, you can start feeding in details about the FD you have in mind. Most calculators will seek inputs like the deposit amount, expected interest rate, tenor and interest compounding frequency.
For example, let’s assume you wish to calculate the interest for ₹20 Lakhs fixed deposit over 5 years at 7.5% per annum with quarterly compounding.
So in the calculator fields, you would enter:
- Principal Amount: ₹20,00,000
- Interest Rate: 7.5%
- Deposit Period: 5 Years
- Compounding Frequency: Quarterly
3. Choose Between Lump Sum or Recurring Deposit
The next key input is whether you plan to invest in a lump sum fixed deposit upfront, or build the corpus gradually through a recurring deposit (RD) where you pay a fixed amount monthly.
In the above example, selecting the “Lump Sum Deposit” option would assume investing the full ₹20 Lakhs amount right away. But if you choose “Recurring Deposit”, you’ll need to additionally input the monthly deposit amount (e.g. ₹30,000 per month to accumulate around ₹20 Lakhs by maturity).
Many calculators also allow you to enter a target maturity amount you wish to achieve. It will then compute the monthly RD instalment required to reach that goal based on the tenor and interest rate.
4. Check the Interest Payout Option
Most FD calculators let you specify if you want the interest earned to be:
- Paid out at maturity along with principal
- Paid out annually/periodically during the deposit tenor
For long-term investments especially, opting for periodic payouts lets you earn additional interest on that interest through reinvestment and compounding. This boosts your overall earnings significantly compared to receiving all interest only at maturity.
The calculator typically has separate outputs for the principal amount, interest earned, and total maturity value factoring in compounding as per your chosen interest payment mode.
5. Analyse the FD Calculator Results
With all the inputs configured based on your investment preferences, you can click the “Calculate” button to view the projected returns on your fixed deposit.
For the ₹20 Lakhs FD at 7.5% for 5 years with quarterly compounding, the calculator might show results like:
- Principal Amount: ₹20,00,000
- Total Interest Earned: ₹6,50,231
- Maturity Amount: ₹26,50,231
This maturity value of 26.5 Lakhs represents the final corpus value you would receive, including both principal and accumulated interest, as per the given parameters.
Many calculators also show the yearly/period-wise breakup of interest earned to help you visualise the growth trajectory of your FD investment over time.
6. Experiment With Scenarios (Tenor, Rate, Amount)
Here’s where FD calculators are quite useful – they let you easily check return scenarios by tweaking variables like interest rate, tenor, deposit amount etc.
For instance, you could test how returns change if you:
- Invest for a longer 7-year tenor instead of 5 years
- At a higher interest rate of 8% versus 7.5%
- Or start with a higher initial deposit of 25 Lakhs
With just a few clicks, you can quickly gauge which combination optimises your FD earnings as per your financial goals and investment horizon. Some calculators may also have graphs to determine the growth of your FD corpus over time.
Whether you’re investing in a bank/NBFC fixed deposit or corporate FD, using a reliable online calculator can go a long way in boosting your earnings through smart planning. With interest rates on the rise, a monthly FD interest calculator is an essential tool to compare the best rates, identify optimal tenors and maximise your wealth creation.