Adulthood is not easy. There are numerous financial responsibilities you have to take care of – not only yours, but your family’s as well. To make things even more complex, apart from the present financial responsibilities, you also have to take care of the future ones. All of which can be difficult. But this is where financial planning comes in.
Financial planning involves the estimation of the capital required to meet your necessary expenses. It also involves determining the means to attain your financial objectives. A savings scheme such as a fixed deposit is a financial alternative to generate a savings corpus to meet your financial requirements. And an FD calculator is a god-sent tool for efficient financial planning. We will be learning more about an FD calculator in a while, but before we do that, let’s take a moment to understand the savings scheme:
What is a Fixed Deposit?
Fixed deposit is a savings scheme offered by major banks and non-banking financial institutions. It is a go-to savings scheme for individuals who want to make their investment portfolio financially secure and those who wish to fulfil their savings objectives. To begin investing in a fixed deposit, an induvial is required to set up an account with the bank. Following that, they are required to make a one-time investment into the scheme. This one-time investment would earn interest every year. It is through the power of compounding that the amount multiplies, making wealth generation easier and faster.
What is an FD Calculator?
An FD calculator estimates the maturity amount accumulated in a fixed deposit account. This maturity amount includes the lump-sum deposit and interest accumulated over the years. You can use an FD calculator as a preliminary step to decide your investment tenure and investment amount. Here is how:
Suppose you are thinking of investing INR 5,00,000 into your fixed deposit account for a tenure of 10 years and a rate of interest of 9%.
Now, if you enter these details into the FD calculator, the maturity amount will be INR 12,17,594.
If you think this amount aligns with your financial plans, you can consider investing the same. If not, you can enter a higher investment value in the FD calculator and check if the maturity amount aligns with your financial requirements.
How Can an FD Calculator Make your Financial Planning Easy?
An FD calculator can help you take crucial financial decisions that can make your financial planning easy.
- Assists your Savings Fund
Savings is the foundation of a strong financial future. An FD calculator can help you create a savings fund by telling you how much your investment will generate in the long run. You can accordingly decide how much more you can invest to reach your savings goals.
- Helps your Investment Portfolio:
A fixed deposit account is a safe investment option for risk-conservative investors as it offers guaranteed returns to the investor. You can use a fixed deposit account to diversify your investment portfolio and make it more secure if it features risky financial assets. By calculating the maturity amount, an FD calculator can help you decide where else and how much more you have to invest to get the ideal returns you are expecting.
- Guides you in Making Financial Decisions:
There are numerous financial decisions one is required to make in their life. You can do so with the help of an FD calculator. Let us take a simple example to understand how.
Let’s say you are considering buying a car knowing it can cause a sizeable deduction in your savings fund. However, if you have already invested in a fixed deposit account, you can know the maturity amount with the help of an FD calculator and determine if it is the right time to purchase.
Why Use an FD Calculator?
By now, we have established that using an FD calculator is a good preliminary practice if you are investing in a fixed deposit account. But here are several more reasons why you should be using an FD calculator:
- Free to Use
You can use an FD calculator innumerable times, and you would not need to pay a penny for it. An FD calculator is free-to-use. So, you can use it indefinitely to make financially wise investments that align with your financial goals and requirements.
- Saves you From Complex Calculations
The maturity amount can be otherwise calculated using the compound interest formula. However, the calculation of the same can be complex, exhausting, and time-consuming. However, if you use an FD calculator, you can save yourself the hassle and time that goes into the calculation.
The Bottom Line
If you find financial planning complex, you can make it easy with an FD calculator. An FD calculator is a must-use tool if you are investing in a fixed deposit. So, what are you waiting for? Use this simple tool and make your work easier.