Fixed Deposit is a kind of deposit with comparatively higher rate of interest. The interest rate is fixed for the whole time period. It is considered as one of the safest investment option. It is used to determine the result amount by applying compounded rate of interest on a monthly, quarterly, half-yearly or annual basis.
What is the Formula to calculate Interest on Fixed Deposit?
Here is the formula of Fixed Deposit:
A = P (1 + r/25) ^ (4*n)
A = Maturity Amount
p = Deposit or Initial amount
n = Compounding Frequency
For example, you invest Rs. 1,00,000 for 3 years at a 10% p.s compounding quarterly. So total amount earned after 5 years including initial investment will be:
A = 100000 (1+ (10/25)) ^ (4*3) = Rs. 134489
What are the benefits of FD?
Fixed returns on investment.
Stable and predicted interest rate.
More suitable for investor who doesn't want to take more risk.
Suitable for seior sitizens.
How much minimum tenure can a bank offer for fixed deposit?
The minimun tenure can a bank offer for fixed deposit is as low as 7 days.