Fixed Deposit Simple Interest SIP + Lumpsum

Fixed Deposit Calculator

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Years
Months

Investment Results

Total Invested: $10000.0

Total Returns: $5605.09

Final Amount: $15605.09

CAGR: 9.3%

Understanding Fixed Deposit Parameters

Parameter Description
Initial Deposit Principal amount invested at the start of the fixed deposit
Investment Period Lock-in period for your deposit (typically 1-10 years)
Interest Rate Annual percentage yield offered by the financial institution

What is a Fixed Deposit?

A Fixed Deposit (FD) is a low-risk investment where you deposit a lump sum with a bank/NBFC for a fixed tenure at predetermined interest rates. Offers capital protection and predictable returns. Interest can be compounded quarterly/annually or paid out monthly, depending on the scheme.

Interest Calculation Methods

Two primary options:

  • Cumulative: Interest compounded quarterly/annually
  • Non-Cumulative: Monthly/quarterly interest payouts
Cumulative FDs typically yield higher returns due to compounding effect.

Safety Features

FDs are considered low-risk because:

  • Insured up to ₹5 lakh per bank (DICGC)
  • Fixed returns unaffected by market fluctuations
  • Regulated by RBI for banks
Credit risk varies between banks and NBFCs.

Liquidity Considerations

Key features:

  • Premature withdrawal penalties (0.5-1% typically)
  • Loan against FD (up to 90% value)
  • Auto-renewal options available
Always check penalty clauses before investing.

Tax Implications

FD interest is taxable:

  • TDS deducted if interest exceeds ₹40,000/year (₹50,000 for seniors)
  • Taxed as 'Income from Other Sources'
  • 5-year tax-saving FDs have lock-in but offer deductions
Form 15G/H can prevent TDS if eligible.

Senior Citizen Benefits

Special FD features:

  • 0.25-0.75% higher interest rates
  • Higher TDS threshold
  • Flexible payout frequencies
  • Special tenure options
Available for investors aged 60+ years.

Reinvestment Strategies

Maximize returns through:

  • Laddering multiple FDs with different tenures
  • Combining cumulative and payout FDs
  • Splitting deposits to stay under insurance limits
  • Rate hike anticipation strategies

Inflation Considerations

FDs may not always beat inflation:

  • Current average inflation: 5-6%
  • Post-tax returns often lower
  • Use step-up deposits to offset
Best for short-term goals or capital preservation.

Historical Returns Comparison

10-year analysis (2013-2023):

Bank FDs 6.5-7.5% CAGR
Corporate FDs 7.5-9% CAGR
Tax-Saving FDs 6-7% CAGR + Tax Benefits

*Rates vary by institution and economic conditions