What would the monthly interest for 10 lakh Fixed Deposit be?
A Fixed Deposit (FD) is one of the most popular investment instruments in India. Banks and Non-Banking Financial Companies (NBFC) offer FDs in India. An FD allows you to save money without undertaking too much risk, invest money for a pre-decided period and earn additional interest income at a predetermined rate of interest. FD interest rates vary according to the bank or financial institution you choose. You can also opt for an FD for a period that suits you, choosing from tenures ranging from 7-14 days to 10 years. So, what would the monthly interest for 10 lakh Fixed Deposit be? Read on to know more.
When you invest INR 10 lakhs in an FD, you can rest assured that the sum invested will be returned to you upon maturity. You will also receive interest on the 10 lakhs you have invested. The interest earned depends on the tenure of the FD. Bank FDs with short terms tend to offer lower interest rates. Depending on what you choose to do with the interest earned, you can broadly classify FDs into two categories.
With Cumulative FDs, the annual interest earned is reinvested in the FD. Thus, you receive the principal amount and all the interest earnings at maturity. Through this type of FD, you can enjoy the benefits of compound interest, with the principal amount increasing each year due to reinvestment. So, over the years, the 10 lakhs invested will increase after the reinvestment of interest.
On the other hand, a Non-Cumulative FD will allow you to receive interest at fixed intervals and enjoy a regular stream of income. You can choose whether you would like to receive the interest monthly, quarterly, half-yearly, or annually.
Calculating the interest due on an FD depends on the amount invested, the rate of interest offered by the bank or NBFC, and the tenure of the FD. You can manually calculate the Fixed Deposit monthly interest for 10 lakh in bank by using the formula given below:
Interest on FD = Amount Invested x Interest Rate x (Duration/ 12 months)
However, you can also get accurate figures regarding Fixed Deposit monthly interest for 10 lakh in bank without doing any interest calculation yourself. You can rely on Fixed Deposit Calculators available online to accurately calculate rate of interest on the Fixed Deposit of your preferred tenure. Remember, Fixed Deposits generally offer interest rates higher than Savings Account rates.
So, whether you choose the monthly interest for 10 lakh Fixed Deposit or the cumulative interest payment option, you can rely on FDs for regular income sources and capital appreciation. FDs also help you meet your short-term goals. This investment is ideal for senior citizens and low-risk investors who wish to invest their savings in safe, capital-protecting instruments.
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*Disclaimer: This article is for information purposes only. We recommend you get in touch with your income tax advisor or CA for expert advice.