Finance Frontier

How much savings do you have? Do you invest them or just store them in a savings account? If you do the latter, then you should know that you are actually losing money every year.

Not only is the interest rate for savings accounts meager, but it does not even keep up with the depreciation rate and inflation rate. This means you lose money instead of gaining it when you just store it in a savings account.

So what can you do to counter that? You can invest part of the money you are saving in a lump sum or start investing periodically in smaller chunks. But what about the risks? You might be asking whether investing leads to the risk of losing your money.

But that is not the case. Depending on where you invest, you can get significant returns even with zero risks. And that is by investing in Fixed Deposits. FD interest rate are high, and that too with zero risk.

Keep reading to find out all about this method of investing.

What is a fixed deposit?

A fixed deposit is a secured way of investing a lump sum to get a fixed return at the end of maturity. This is the preferred method of investing for most Indians as it is not subjected to any risk, and the investor will receive guaranteed returns at the end of their tenure.

How do you calculate the FD interest rate?

For those considering investing in Fixed Deposits, it is essential to understand the investment partner and the returns one might get at the end of the term.

For example, two banks offer the same interest rate for a term you are considering. Bank A might offer FD at a 5% interest rate for 18 months, the same as Bank B. But Bank B provides an interest rate of 5.5% for 24 months compared to 5.25% at Bank A.

To compare this difference and get the best investment return, you should consider using an FD interest calculator. You can get an FD calculator by downloading the Bajaj Finserv app and following these steps.

1. Sign up after entering your mobile number
2. On the home page, you will see an icon for Fixed Deposit.
3. Click on it and use the in-built fd calculator to simulate different situations by changing the customer type, deposit amount,  tenure, and interest payout frequency.
4. This will help you make the best decision and get the best return on your investment.
5. Once satisfied, you can click on the Invest Now button on the FD page.

What is the tax on FD returns?

For those unaware, if the total interest earned for a financial year on an FD is more than Rs 40,000, it is liable for TDS at a rate of 10%.

But what can you do to know when you are liable for TDS, and the interest you look forward to will not be reduced? You can check it using an FD calculator. Using an FD calculator also helps in calculating tax on the interest earned.

There are also two more ways to reduce your tax component on the FD interest. That is by availing tax-saving FD plans that offer a maximum deduction of up to Rs 1.5 Lakhs by investing in them. Or by filing a Form 15-G (15-H if you are a senior citizen) if your total income is less than the taxable slab.

Conclusion

Using the above-given steps to use an FD interest calculator, one can plan their taxes better and calculate their returns to get the best terms for their investment. By doing this, FDs become one of the most rewarding forms of investment, which faces no risks.