Smart Investment Planning: Utilising FD and NPS Calculators for Better Returns

Saving your financial future can seem challenging, but not if you utilise the right tools to make your life and calculations easy. If you need a smart investment planning process that caters to a sound financial future, then tools like an NPS or FD Interest calculator can be of great help. Not sure what an NPS calculator is or how to use an FD calculator? This post will guide you through it all. So, let’s take a look at the meaning and understand how to use these financial tools below.

What is an FD Interest Calculator?

Fixed Deposits (FDs) are a type of term investment offered by several banks and Non-Banking Financial Institutions(NBFCs). These investments offer a return based on the rate of interest, which differs from bank to bank depending on the period of maturity. An FD interest calculator comes into the picture when you wish to understand the amount you will receive upon the maturity of your Fixed Deposit. You can find a simple-to-use FD interest calculator on websites of reputed insurers like Axis Max Life Insurance to determine the interest upon maturity within seconds.

Why is using an FD Interest Calculator Beneficial?

Calculating the interest amount by using the formula can seem complicated and time-consuming, which is why many people like to use the calculator for quick results. Let’s understand a few more reasons why. Using the Calculator, you can compare the interest amounts and rates offered by different banks and Non-Banking Financial Institutions. This will give you a brief idea of which institution is best suited to make an investment like this and receive good results.

Formula To Calculate FD Interest Amount

1.The formula for calculating simple interest would be:

           M = P + (P x r x t/100) ,

where,

P = Principal Amount (The amount you deposited)

r= Rate of Interest per annum

t= Time of investment

Let’s understand the same with the help of an example: You deposited INR 1,00,000 for 6 years at 10% interest offered by a financial institution, then:

M= INR  1,00,000 + (1,00,000 x 10 x 6/100)

= INR  1,60,000

2. The formula to calculate compound interest would be:

M=P(1+100r​)t,

Where,

P= Principal Amount

i= Rate of Interest/ period

t= tenure

Let’s understand the same with the help of an example, taking the same variables as before:

M= INR  1,00,000 {(1 + 10/100)^ 6-1}

= INR 1,77,156.10

If you are unsure how to use the FD calculator to find the interest and maturity amount, all you have to do is enter details like tenure, interest rate, and the amount you are investing, and press to see the results.

What is an NPS Calculator?

The National Pension Scheme (NPS) is a government-backed pension scheme that offers financial stability to individuals after retirement.

An NPS calculator comes into the picture when you need to make out the amount you have collected so far. You are eligible to start putting finances in this fund from anywhere between 18 years of age till you turn 60. The corpus can be partially withdrawn after retirement, but there are specific rules regarding annuitisation.

Benefits of Using a NPS Calculator

An NPS calculator will not just save you from tedious manual calculations but also save you time. It will:

1. Assist you in understanding the amount of money you will be able to withdraw in the future. Knowing the amount of money you will receive, you can pre-plan your investments or manage your finances, factoring in NPS as a source of income.
2. According to the current law, you can not withdraw the whole amount even after retirement. 40% of the amount must be invested in annuities, and 60% of the remaining amount can be withdrawn but will be subjected to taxation. You can understand this entire breakup with the assistance of an NPS calculator.

Formula For Calculating NPS Amount

NPS uses compounding interest to calculate its returns. The Formula for calculating NPS returns could be:
A = P (1 + r/n) ^ nt,

This formula works for lump sum investments. However, this isn’t ideal for monthly investment plans. For monthly contributions, the formula needs to be adjusted accordingly. But the calculator does this automatically.

The formula for calculating the future interest of monthly payment:

A=P×((r/n)(1+r/n)nt−1​)

where,

P= Principal sum

r= Rate of Interest per annum

n= Number of times interest compounds

t=Total tenure

Let’s understand the procedure of calculating the same with the help of an example:
If you are 40 years old and your monthly contribution is INR 2000, you will be required to add the same amount for 20 more years. Assuming the ROI is 10% per annum, the following calculations will be made according to the formula.

Total principal expected = INR 4,80,000

Sum expected upon maturity = INR 14,09,687.99

If you are wondering how to use the calculator, open a trusted NPS calculator, enter your investment per month, expected return rate, current age, and age until you are going to invest, and press enter to see the estimated amount and returns at retirement.

Conclusion

Investing carefully is important in order to secure your future financially. If you are planning to invest in financial schemes like an FD or NPS, then using calculators to plan your investment can be fruitful. These calculators not only provide an accurate idea but also save you time when comparing different institutions to make the investment.

Now that you know the meaning, benefits, and formula the tools are based on, making informed decisions will be quicker and more efficient.