Fixed Deposit is an investment offered by various banks and non-banking finance companies, where an investor can deposit a lump sum amount of money for a fixed rate of interest for a specific period. Once the money is invested, it starts earning a good amount of interest and you may use tools such as FD rate return calculator or FD maturity calculator for your further planning. To compensate for the low liquidity, FD offers a higher rate of interest than savings accounts.
If you are planning to put your savings amount in FD, use the FD calculator for maturity calculations. You can get a return amount idea by using the FD return calculator. It is one click away tool to know the maturity amount. You can use the FD maturity calculator whether you are putting your FD in a bank or a post office. The online FD maturity calculator allows you to calculate the maturity amount or returns on your FD. So, it is similar to a normal calculator you just need to enter a few details and get your answers. For post office schemes in India, the post office FD calculator is a suitable tool.
The FD interest rates calculator from Budwisefunds is very simple and easy to use
- Choose the amount you wish to fix deposit
- Choose the time period of your investment
- Frequency of compounding (yearly, half-yearly, monthly or quarterly)
- Choose FD tenure
- Enter the interest rate
Once you enter the required data, you will automatically be able to see the Total Investment, interest earned and Maturity Value. You will also be able to see a graphic representation of your investment and maturity value for easy understanding. So, before you invest your money, you can calculate your returns to streamline your investments effectively.
1. These are the safest investment schemes.
2. Returns are assured and there is no risk factor for loss of principal amount.
3. There is no effect of market fluctuations on your money.
4. You get benefits from higher interest rates from different organizations.
5. Better returns to senior citizens are also offered.
6. You can also claim for a refund of deducted TDS if your income is below the maximum tax slab of 10%.
Investing in FD has its own limitations:
1. The interest on FD does not have any special taxation benefits. Considering inflation, the inflation-adjusted returns at the end do not turn out to be as high as expected.
2. Being a low liquidity deposit, you cannot withdraw prior to the maturity date and if you do interest rates are slashed. However, some banks offer a premature withdrawal facility.
3. If you have an appetite for risk, then FD deposits are not the best bet for increasing your returns and building wealth. However, the stability and security of FD are motivating factors for some investors to invest.
Recurring deposits are especially for those who are not in a position to invest a lump sum amount or those looking to save on a monthly basis for their future. It is a special type of deposit that helps people with regular incomes to deposit a fixed amount every month. This can be funded by standard instructions by the customer to the bank to withdraw a certain sum of money from his savings or current account and credit to the RD account. So, it is a pre-agreed on the interest rate to which a depositor deposits a fixed amount on a monthly basis. It is similar to making fixed deposits of a certain amount in monthly installments for a minimum to maximum period. If any installment is delayed/missed, then the bank charges some penalty. If you miss the payment for the subsequent months also, then the bank can close your RD account. It depends upon the bank’s internal policy.
The account holder can withdraw the amount after the expiry of the term. Moreover, withdrawal of the amount in the middle of the term is not permissible, although a depositor can close the account if he is in need of funds.
1. Sometimes investors get confused that whether they should go for FD or RD. Both RD and FD have a fixed rate of returns. The difference is in the way of doing investment. If you wish to make a lumpsum investment, then go for a fixed deposit and if you wish to invest in a monthly mode, then RD is a better option for yourself.
2. There is no risk at all for investors. Fixed deposit scores higher than a recurring deposit, despite, both these products have the same taxability.
3. However, there is a difference in the nature of tax deduction. In FD TDS is deducted if interest income in a year exceeds the amount 10000, but there is no TDS deduction in recurring deposits. But, in both cases, the interest amount is taxed as per the income tax slabs.
4. When you compare both these products, an FD fetches you more income. But, when it comes to your feasibility and you don’t have a lump sum to invest but can save a defined amount from your income every month, RD is a more viable product.
1. FD offers fixed and guaranteed returns at a predefined rate of returns over a specific time period. However, mutual fund returns are linked to the market and are completely dependent on stock market performance.
2. FD comes with zero risks, however, mutual funds involve market risk.
3. One can break his FD by paying penalty in case of pre-mature withdrawal, but you can easily withdraw your amount from mutual fund free of penalty or charge after a given point of time.
4. Over a long period of time, mutual funds give a decent double-digit rate of return and are a highly viable option to build wealth.
5. Mutual funds have high liquidity but in the case of bank FD, liquidity is bound by the tenure of the FD. Again pre-mature withdrawal route is open in FD, but then you would lose out a portion of your expected returns.
6. In FDs, the interest is taxable as per your tax slab, however, in mutual funds tax depends on the category and time horizon of your investment in a mutual fund – equity or debt/ short term or long term.
So, when it comes to saving money, many people often go for Fixed Deposits, as it comes with zero risks but those who are looking for long term financial goals and building substantial wealth can choose the Mutual Fund route. Although subject to risk, with the backing of a sound financial advisor, the risk involved in investing your money in Mutual Funds is substantially reduced.
SIP (Systematic Investment Plan) is a plan offered by mutual funds to an investor to invest small amounts of money regularly. So it is advisable to save some part of your income every month and start SIP with good equity mutual fund.
1. Returns are linked to markets in SIP, whereas, in RD there is the same interest rate as a fixed deposit tenure.
2. An RD is a fixed interest product and there is no volatility but SIP in mutual funds enjoys market up and downs.
3. RD makes sense in short term goals. On the other hand, if someone is looking for long term goals, then SIP in a good equity mutual fund is a better option. Get an idea by using the SIP calculator.
4. Of course, RD provides stability, security and assured returns irrespective of SIP which provides higher returns than fixed income security.
Q1. What is the minimum amount which I can deposit every month in RD and SIP in mutual funds?
A. Most banks have a minimum of Rs. 500 per month but in mutual funds, you can start with as low as 100 per month.
Q2. Is RD a good investment?
A. Yes, RD is a good investment if you are looking for a safe and secure investment else choose SIP for wealth creation in 5 years.
Q3. Which is better FD or RD?
A. When you have a lump sum then investing in FD is a wiser decision or else when you don’t have a lump sum to invest, then RD is a viable product.
Q4. Are mutual funds better than fixed deposits?
A. In terms of risk, FD is better. In terms of returns, the mutual fund has the upper hand.
Q5. Do banks deduct TDS on the interest income from FD's?
A. Tax is deducted by the banks on FDs when interest paid to a customer at any bank exceeds Rs 10,000 in a financial year.