Saving money is one of the significant aspects of building your wealth, and surprisingly, not everybody can successfully save money all the time. To enjoy a quality life, you should start saving a small portion of your earnings. To grow your wealth exponentially, spending money wisely and simultaneously developing the habit of saving is essential.
What is a Fixed Deposit?
Currently, one of the most sought-after investment instruments is the Fixed Deposit. Also known as an FD, it is an investment offered by banks and non-banking financial companies (NBFC) to help people save money. Interestingly, one can invest a sizeable amount of money here because the Fixed Deposit Interest Rate is predetermined for a fixed period. So basically, in this arrangement, the borrower invests money for a fixed term and a fixed return.
What are the types of fixed deposits?
Before investing your hard-earned money, make sure you go for the right fixed deposit investment and calculate fd interest. However, there are two types of fixed deposit schemes available –
Cumulative fixed deposit
This type of fixed deposit offers compounding benefits to the holders because it gives both the accumulated interest and principal on maturity. So, instead of paying the interest to you periodically, the lender reinvests it and enables you to earn interest on interest. This type of FD is feasible for those who are not looking for periodic payouts from their investments.
Non-cumulative fixed deposit
This type of FD is a regular income scheme that gives the investor an option to choose their period of interest payout. So, instead of reinvesting, the lender transfers the amount to you. The non-cumulative fixed deposit is feasible for senior citizens and other individuals looking to generate periodic cash returns from their smart investment. However, the total interest-earning is significantly lower than the cumulative FD option.
What are the top features of a Fixed Deposit?
One of the prime reasons why a fixed deposit is said to be safe is because it gives you guaranteed returns. These returns are generally over the returns you get on your savings account and may vary depending on the principal amount, banks, and tenure.
Investment options such as mutual funds, bonds and sticks give you high returns but are volatile in nature as they are linked to market risks. So, people who don’t want to or are not ready to take such risks can invest in FD. If you go for the right fd interest rate and tenure, they are an excellent option for long-term financial goals.
One can easily break the fixed deposit before it matures. In case of any financial emergency, you can withdraw the locked-in amount anytime for a small penalty. Remember, it is difficult to liquidate other forms of investments, such as bonds or stocks, in a short period because of their high value. However, unless there is a serious emergency, it is advisable not to withdraw money before it matures as it will affect the returns.
How to Calculate Fixed Deposit Interest Rate Online?
Here, I’ll share my personal experience. I have been using the Bajaj Finserv Application on my smartphone for doing all sorts of digital payments. From my mobile recharge to my electricity bill, I make every single payment here. However, I checked out their FD calculator when I was planning to invest in Fixed Deposit last year. The simple steps to do the same are as follows –
- Download the ‘Bajaj Finserv: UPI, Pay, Loans’ application from the Play Store (Android) or App Store (iPhone).
- Open it and click on the top left icon with three lines.
- Choose the ‘Try our Calculators’ option.
- Go to ‘Deposits Calculators’ and choose ‘Fixed Deposit Interest Calculator.
- Enter the required details, and you are good to go!
This gives you a brief idea of how you should pave the way forward regarding your investment. It is essential to know how much you invest and what will be the return on investment so that you can focus on your other financial goals as well.