Fixed Deposit Maturity Calculator
Estimate your final wealth and total yield based on compounding frequency.
Understanding Fixed Deposits (FD)
A Fixed Deposit is a financial instrument provided by banks or non-banking financial companies (NBFCs) which provides investors a higher rate of growth than a regular savings account, until the given maturity date. It is considered one of the safest investment avenues available.
How Fixed Deposit Growth is Calculated
The maturity value of a fixed deposit depends on the principal amount, the duration of the deposit, and the frequency of compounding. Most financial institutions compound growth on a quarterly basis, which means you earn "returns on returns" every three months.
The formula used for compounding is:
A = P (1 + r/n)^(n*t)
- A: Maturity Value
- P: Principal Amount
- r: Annual Yield Rate (decimal)
- n: Number of compounding periods per year
- t: Number of years
Example Calculation
| Investment Component | Value |
|---|---|
| Principal Amount | 10,000 |
| Annual Yield | 7% |
| Tenure | 2 Years |
| Compounding | Quarterly (n=4) |
| Final Maturity | 11,488.82 |
Benefits of Fixed Deposits
1. Guaranteed Returns: Unlike the stock market, the return rate on an FD is locked in at the time of deposit, ensuring a predictable outcome.
2. Flexible Tenures: You can choose periods ranging from 7 days to 10 years depending on your liquidity needs.
3. Higher Yield for Seniors: Most institutions offer an additional yield percentage for individuals above the age of 60.
4. Loan Facilities: Investors can often take a loan or overdraft against their FD balance (usually up to 90%) without breaking the deposit.