Before making an investment there are several important dynamics that you should aim to balance. The relationship between risks and returns is one. Maturity periods and potential
financial obligations are another. Profits come your way when your investment ensures you earn generous returns over a range of variables. One such versatile instrument that you can bank on is a fixed deposit.
What’s better is that with an FD you needn’t leave any of your computations to the realm of estimates. You can get accurate ROI figures by using an FD calculator. So, let’s traverse the FD landscape, take a look at its main features, and consider the benefits of using an FD calculator.
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FD Interest Rates And Risk Potential
Fixed deposit interest rates range from average to high. FD interest rates are not linked to the market and remain constant across your deposit’s tenor. While most banks offer FD
interest rates in the range of 6% to 8%, company FDs tend to go higher. For instance, with the Bajaj Finance Fixed Deposit you can get an interest rate of up to 9.10% if you are a senior citizen, up to 9% if you are an existing customer and up to 8.75% if you are a first time FD investor when you choose a tenor of at least 36 months with returns at maturity.
One main reason why FDs are sought after is that this investment couples high returns with low risks. Bank FDs keep your finances in a stable environment. Company FDs, on the other hand, can be a little risky, and so, before investing look for its ICRA or CRISIL ratings.
The Bajaj Finance FD carries an ICRA rating of MAAA and a CRISIL rating of FAAA. These are the highest ratings of the two agencies and imply that the FD is highly reliable and your investment in such an FD will always give you stable returns.
Lock-In Periods And Tax Benefits
Fixed deposits allow you to choose maturity terms ranging from 7 days to 10 years. This gives you the ability to plan your investment to best meet your existing obligations and
potential needs. However, before choosing your tenor, you should be aware that most issuers will grant you the highest FD rate when your tenor is at least 36 months. The
relationship between interest rates and tenors is not always linear.
Now let’s consider taxes. As per the interim Budget 2019, you can land up paying nil taxes during the next financial year, if you meet certain conditions and your income and interest
earnings from investments cumulatively do not cross Rs.5 lakh. Moreover, according to Budget, you will also get a concession on TDS on interest earnings for bank and post office
FDs. Here you will not be charged TDS if your earnings in a year do not exceed Rs.40,000. This was earlier capped at Rs.10,000.
Compute returns with an FD calculator
FD interest returns, which are governed by complex mathematical formulae, can be computed instantly by an FD calculator. Let’s take an example and generate results using
the Bajaj Finance FD calculator. Say you are a new customer investing a sum of Rs.3 lakh in an FD for a tenor of 36 months. Once you feed these parameters in the FD calculator, your relevant FD interest rate will be automatically applied based on the tenor and profile. Going by the above example, you will earn Rs.85,842 as interest at the rate of 8.75% and receive a total of Rs.3,85,842 at maturity.
Use FD calculator to know your tax liability
Once you know your interest earnings on the FD, you can add that to your annual income and thus determine your tax bracket in advance. Let’s see how this works for the above
example. At the end of one year, the interest earned on Rs.3 lakh at 8.75% interest rate compounded annually is Rs.26,250. Let’s peg your annual income at Rs.8 lakh. Now your
taxable income becomes Rs.8,00,000 + Rs.26,250 = Rs.8,26,250. This amount makes you eligible for the 20% tax slab as per Income Tax Act. So, once you know this calculation you
can plan your taxes and pay them accordingly.
Having seen why an FD makes for a good investment and how to compute your returns on it, look out for a fixed deposit that has simple and convenient onboarding terms like the
Bajaj Finance Fixed Deposit. Apply for this FD with an online application form to start earning lucrative returns without any delay. Begin today as it takes just Rs.25,000 to do so!