Simplest way to calculate Fixed Deposit
FD stands for Fixed Deposit. It is a financial investment product offered by banks and financial institutions
where an individual deposits a certain amount of money for a fixed period at a predetermined interest rate. The
interest rate offered on fixed deposits is generally higher than regular savings accounts.
An FD calculator is a tool or software that helps calculate the maturity value or interest earned on a fixed
deposit. It takes into account the principal amount, interest rate, tenure, and compounding frequency to provide
an estimate of the maturity amount.
Annual Compounding:
Maturity Amount = Principal × (1 + Rate of Interest / 100)^ Time
Semi Annual Compounding:
Maturity Amount = Principal × (1 + Rate of Interest / 200)^ (Time × 2)
Quarterly Compounding:
Maturity Amount = Principal × (1 + Rate of Interest / 400)^ (Time × 4)
Monthly Compounding:
Maturity Amount = Principal × (1 + Rate of Interest / 1200)^ (Time × 12)
Total Interest:
Total Interest = Maturity Amount - Principal
Suppose you deposit ₹ 1,00,000 for a tenure of 5 years in a fixed deposit account with an annual interest rate of 6.5 %, compounded annually.
To calculate the FD:
| Principal Amount | = 1,00,000 |
| Interest | = 6.5 % |
| Time Period | = 5 Years |
With annual compounding, the interest is calculated and added to the principal once a year.
| Maturity Amount | = Principal × (1 + Rate of Interest / 100)^ Time |
| = 100000 × ( 1 + 6.5 / 100 )^ 5 | |
| = 100000 × ( 1 + 0.065 )^ 5 | |
| = 100000 × ( 1.065 )^ 5 | |
| = 100000 × 1.37008666342 | |
| = 137008.666342 | |
| = 137009 |
| Total Interest | = Maturity Amount - Principal |
| = 137009 - 100000 | |
| = 37009 |
With semi-annual compounding, the interest is calculated and added to the principal twice a year (every 6 months).
| Maturity Amount | = Principal × (1 + Rate of Interest / 200)^ Time × 2 |
| = 100000 × ( 1 + 6.5 / 200 )^ 5 × 2 | |
| = 100000 × ( 1 + 0.0325 )^ 10 | |
| = 100000 × ( 1.0325 )^ 10 | |
| = 100000 × 1.37689430386 | |
| = 137689.430386 | |
| = 137689 |
| Total Interest | = Maturity Amount - Principal |
| = 137689 - 100000 | |
| = 37689 |
With quarterly compounding, the interest is calculated and added to the principal four times a year (every 3 months).
| Maturity Amount | = Principal × (1 + Rate of Interest / 400)^ Time × 4 |
| = 100000 × ( 1 + 6.5 / 400 )^ 5 × 4 | |
| = 100000 × ( 1 + 0.01625 )^ 20 | |
| = 100000 × ( 1.01625 )^ 20 | |
| = 100000 × 1.38041977486 | |
| = 138041.977486 | |
| = 138042 |
| Total Interest | = Maturity Amount - Principal |
| = 138042 - 100000 | |
| = 38042 |
With monthly compounding, the interest is calculated and added to the principal twelve times a year (every month).
| Maturity Amount | = Principal × (1 + Rate of Interest / 1200)^ Time × 12 |
| = 100000 × ( 1 + 6.5 / 1200 )^ 5 × 12 | |
| = 100000 × ( 1 + 0.00541666666 )^ 60 | |
| = 100000 × ( 1.00541666666 )^ 60 | |
| = 100000 × 1.38281732421 | |
| = 138281.732421 | |
| = 138282 |
| Total Interest | = Maturity Amount - Principal |
| = 138282 - 100000 | |
| = 38282 |
