Why is it important to use FD calculator before investing?

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When thinking of investing money in India, we have such a wide variety of options to choose from. You could try your chance in the stock markets and invest in equity or financial derivatives like bonds, options, etc. For the ones to diversify and have managed portfolios, mutual funds are becoming a popular choice. However, all these investment opportunities are subject to market risk. For someone who’s risk-averse and is looking for a safe and assured return, fixed deposits are your way to go. For a very long time, investing in fixed deposits and assured return assets has been the go-to option for investors. Even in today’s dynamic market, a sizable share of investors consider FDs a reliable investment option.

But, similar to all other products, fixed deposits have evolved to meet the diverse needs of the audience. Every financial institution today offers different FD options for varying rates, tenures, maturity instructions, etc. Thus, making them slightly complex and allowing investors to maximise their returns. But with an FD calculator, you have a useful tool at your disposal to plan your investments and make an informed choice.

1. Know your maturity value before investing
   For most fixed deposits longer than 6 months, banks calculate the interest payout for investments using compounding. So, when you are comparing different time periods, interests or principal investments, calculating the accrual interests can be cumbersome and daunting. By using the FD calculator, the investor can simply adjust the factors to assess and compare the interest payout at the end of the tenure. Therefore, simplifying the task of finding the right deposit factors for the user.
2. Informed decision and financial planning
   If you are using fixed deposits as a financial planning asset to save up for a future expense, you need to know what it’s worth. Using the FD calculator you can simulate and access the future/maturity value of your deposit at maturity. This will enable you to make an informed decision on whether you should lock in your money in the deposit. Moreover, you can compare the returns from the fixed deposit to any other investment opportunities you have. And decide between the pros and cons of both, to make necessary investment choices.
3. Tenure selection and assessing additional deposits
   Certain fixed deposits have the option to add more or withdraw part of your deposit during the tenure. While there might be some charges involved depending on the bank, the FD calculator helps you plan it. Moreover, you can choose from a range of different tenures to compare and access the returns for each. Some banks have different interest rates for different tenures and investment amounts. Having an FD calculator makes your life easier and to calculate them without hassle.

Now there are numerous FD calculators available online for you to plug in the values and know your future cash flows. All you need to do is understand how to use it and gain insights into your expected returns. Building wealth and tailoring your investment strategies are the key to any financial plan, and an FD calculator is a great tool for you to do so.