A Fixed Deposit (FD) is a financial instrument offered by banks and non-banking financial institutions that provides investors with a fixed rate of return for a specified period. It's a popular choice for individuals looking for safe and predictable investment options.
The Formula Explained
The interest earned on a Fixed Deposit is typically calculated using the power of compounding. The formula for calculating the future value of an investment with compound interest is:
FV = P (1 + r/n)^(nt)
Where:
FV = Future Value of the investment/deposit, including interest
P = Principal amount (the initial sum of money invested)
r = Annual interest rate (as a decimal)
n = Number of times that interest is compounded per year
t = Number of years the money is invested for
To find the Total Interest Earned, you subtract the Principal amount from the Future Value:
Total Interest = FV – P
How the Calculator Works:
Our calculator takes your inputs for the Principal Amount, Annual Interest Rate, Tenure (in years), and Compounding Frequency (Annually, Semi-Annually, Quarterly, or Monthly) to apply the above formula. It then calculates both the total interest you will earn and the total amount (principal + interest) you will receive at the end of the FD tenure.
Use Cases for an FD Interest Calculator:
Investment Planning: Estimate potential earnings from an FD to compare with other investment options.
Goal Setting: Determine how much you need to invest to reach a specific financial goal by a certain time.
Budgeting: Understand the passive income you can expect from your FD investments.
Financial Literacy: Learn about the impact of interest rates, tenure, and compounding on your savings.
Understanding how your FD interest is calculated empowers you to make informed financial decisions. Use this calculator to explore different scenarios and maximize your returns.
function calculateFdInterest() {
var principal = parseFloat(document.getElementById("principal").value);
var interestRate = parseFloat(document.getElementById("interestRate").value);
var tenure = parseFloat(document.getElementById("tenure").value);
var compoundingFrequency = parseInt(document.getElementById("compoundingFrequency").value);
var resultDisplay = document.getElementById("result-amount");
var totalValueDisplay = document.getElementById("total-value");
if (isNaN(principal) || isNaN(interestRate) || isNaN(tenure) || isNaN(compoundingFrequency)) {
resultDisplay.innerText = "Invalid Input";
totalValueDisplay.innerText = "";
return;
}
if (principal <= 0 || interestRate < 0 || tenure <= 0 || compoundingFrequency <= 0) {
resultDisplay.innerText = "Inputs must be positive";
totalValueDisplay.innerText = "";
return;
}
var ratePerPeriod = interestRate / (100 * compoundingFrequency);
var numberOfPeriods = tenure * compoundingFrequency;
var futureValue = principal * Math.pow((1 + ratePerPeriod), numberOfPeriods);
var totalInterest = futureValue – principal;
resultDisplay.innerText = "₹ " + totalInterest.toFixed(2);
totalValueDisplay.innerText = "Total Amount: ₹ " + futureValue.toFixed(2);
}