Fixed Deposit Calculator with Half-Yearly Compounding – Estimate FD Returns
The Fixed Deposit Calculator with Half-Yearly Compounding is an effective tool for estimating the returns on your fixed deposit with interest compounded twice a year. This method of compounding results in higher returns compared to simple interest, as the interest is added to the principal every six months, allowing it to compound more frequently.
What is Half-Yearly Compounding?
In half-yearly compounding, the interest on your fixed deposit is added to the principal every six months. This means that your deposit earns interest on the interest every six months, which accelerates the growth of your investment over time.
How the FD Calculator with Half-Yearly Compounding Works
To use the calculator, input the following details:
- Deposit Amount – The amount you plan to invest
- Annual Interest Rate – The interest rate offered by the bank
- Tenure – The duration of your fixed deposit (in years)
The calculator will provide the following results:
- Total Maturity Amount (Principal + Interest)
- Total Interest Earned over the tenure
Formula Used for Half-Yearly Compounding
Maturity Value = P × (1 + r/200)2n
Where:
- P = Principal amount
- r = Annual interest rate (%)
- n = Number of years
Example Calculation
If you invest ₹1,00,000 at an interest rate of 7% per annum for 3 years:
- Maturity Amount: ₹1,23,525
- Total Interest Earned: ₹23,525
Advantages of Half-Yearly Compounding FDs
- Higher returns compared to simple interest or yearly compounding
- More frequent compounding increases the effective yield
- Ideal for medium-term savings goals
Taxation on FD Interest
Interest earned on fixed deposits is taxable under the head “Income from Other Sources.” If the total interest in a year exceeds ₹40,000 (₹50,000 for senior citizens), TDS is applicable. You can submit Form 15G or 15H to avoid TDS, provided you’re eligible.
Conclusion
The Fixed Deposit Calculator with Half-Yearly Compounding is a simple yet powerful tool for estimating your FD returns. By using this calculator, you can make more informed decisions about where to park your funds for optimal returns with the benefit of frequent compounding.