Fixed Deposit Calculator

What is Fixed Deposit Calculator?

A Fixed Deposit Calculator is a tool or utility used to determine the returns on a fixed deposit (FD) investment over a specified period. Fixed deposits are a popular investment option where a sum of money is deposited with a financial institution at a fixed interest rate for a fixed term.

Principal (Deposit Amount):

• The principal is the initial amount of money deposited into the fixed deposit account.
• This amount will earn interest over the specified period.

Interest Rate:

• The interest rate is the percentage at which the principal amount will grow.
• It is typically fixed for the entire term of the deposit and is usually expressed as an annual percentage rate (APR).

Term (Duration):

• The term is the length of time for which the money will be deposited.
• It is usually measured in months or years.

Compounding Frequency:

• Compounding refers to how often the interest is calculated and added to the principal.
• Common compounding frequencies include annually, semi-annually, quarterly, and monthly.

Fixed Deposit Formula:

• The formula to calculate the maturity amount of a fixed deposit, with compound interest, is:
  A = P(1 + r/n)^(nt)
• Where:
  A = the maturity amount (principal + interest)
  P = the principal deposit amount
  r = the annual interest rate (decimal)
  n = the number of times interest is compounded per year
  t = the term of the deposit, in years

Example Calculation:

• If you deposit ₹5,000 at an annual interest rate of 4%, compounded quarterly, for 2 years, the maturity amount would be calculated as:
  A = 5000(1 + 0.04/4)^(4*2) = ₹5,408.16