Indian Overseas Bank is one of the most trusted banking institutions in the country. It offers numerous services to the public, one of which is a lucrative fixed deposit investment scheme. This FD is a safe investment option, which offers guaranteed returns to investors, making them ideal for low-risk takers.
Furthermore, to help investors make a sound financial decision, there is a facility of an IOB FD calculator to assess their interest earnings from the investment. An individual only needs to enter a few details regarding his/her FD to see an accurate outcome from the same.
While using the IOB FD interest rates calculator is optional, one can benefit greatly from such a tool. Listed below are just a few advantages that an investor can look forward to from such calculators.
However, before understanding the formula and method for FD calculation, prospective investors should take a look at the different terms and rates available for IOB FDs.
Also Read, Indian Overseas Bank FD Interest Rates
To determine the FD profitability using a calculator, or manually, one needs to follow a specific formula. This formula is,
A = P (1+r/n) ^ n x t
Here, A and P refer to the maturity amount and the principal investment, respectively. The investment tenure is represented by ‘t’, whereas ‘r’ signifies the FD interest rate applicable. Lastly, ‘n’ is the frequency at which interest is computed in a year.
To further clarify how this critical IOB FD calculator formula works, one can refer to the example illustrated below.
Example of FD Calculation
Ms. Sakshi is in her mid-forties and decides to invest Rs.6 lakh in an Indian Overseas Bank FD for 8 years. From the table above, one can see that she is eligible for 6.1% interest earnings on her investment. She picks annual interest computations for her investment.
From the information above, one can derive the following factors for Sakshi’s FD investment.
P = Rs.6,00,000
t = 8 years
r = 6.1/100 = 0.061
n = 1
Thus, A = 600000 (1+0.061/1) ^ 1 x 8
A = Rs.9,63,550
Return on investment for Sakshi would be I = A – P
Or, Rs. (9,63,550 – 6,00,000) = Rs.3,63,550
As it is evident, manual calculations of such complexity can take a long time. This is why using an IOB fixed deposit calculator is the better option to determine FD profitability.
Each parameter in the IOB fixed deposit interest rates calculator influences the final return on investment. An investor must understand how changes in each factor can improve or degrade their earnings from an FD.
The amount individuals deposit into an FD account determines their interest-earning potential. One who invests more can take advantage of higher returns and vice versa. Thus, if an investor is unhappy with their projected returns from fixed deposits, he can increase the principal slightly and calculate profitability once again.
How long an investor plans to deposit the sum also plays a huge role in determining his/her profitability from it. Most banks associate interest rates with investment tenure. Generally, banks reserve the most significant rates for people who invest for a considerable period, instead of just a few months.
Picking the highest rates available is always beneficial for investors. However, to do so, one must be ready to park the funds for a significant period. This is because the highest rates are often reserved for longer terms. Further, senior citizen investors often receive extra interest on their FD investments.
Additionally, the frequency of interest computation can also affect total returns. Nevertheless, altering the frequency only slightly changes the returns. Thus, one can term such a change as inconsequential.
Using an FD calculator can help an investor pick the most suitable principal, interest rate and tenure. Also, it can help them set realistic expectations when it comes to returns on their investments.
Based on the investment tenure of your choice and the corresponding interest rate applicable, you can find the amount of interest earned and subsequently the net amount you will receive at the end of the selected tenure. All you have to do is enter the principal amount, interest rate and time period in the respective fields in the calculator and the results would be generated instantaneously.
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