# How Does A Fixed Deposit Work?

A fixed deposit, or ‘FD’, is a type of savings/investment account that promises the investor a fixed rate of interest.

In return, the investor agrees not to withdraw or access their funds for a fixed period of time.

In a fixed deposit investment, interest is only paid at the very end of the investment period.

## Is fixed deposit interest paid monthly?

Interest paid on a fixed deposit is paid either monthly or quarterly according to the investor’s choice. So if you invest Rs 3 lakhs in a one year fixed deposit which pays 8 per cent you can earn Rs 2,000 of interest every month or Rs 6,000 of interest every quarter.

## How does bank fixed deposit work?

Fixed Deposits are bank deposits for a fixed or specified period chosen by investor or depositor at a fixed rate of interest. You can deposit money for as short a period as 7 days and upto 10 years. As interest rate and time period are fixed this investment product is called as Fixed Deposit.

## How is fixed deposits calculated?

The rate of interest on FD and frequency of interest payouts define the returns on your FD investment. These interest rates are usually higher, and they are compounded periodically. The formula for calculation of Fixed Deposits is listed below: A = P (1 + r/4/100) ^ (4*n) and A = P (1 + r/25)4n.

## Is fixed deposit a good investment?

Fixed Deposits

Fixed Deposits are long-term investment tools that help investors save some money from their income for rainy days. As one of the most traditional and safest means to invest, many prefer it for wealth creation and saving taxes. Yes, it is eligible for tax deduction under 80C.

## How many years FD will double?

than according to Rule 72 your invested money will be doubled in 72/8 = 9 years. This means if you invest Rs.1 lakh in Bank Fixed today than you will get Rs.2 lakhs if you stay invested for 9 years.

## What is fixed deposit monthly?

A Fixed Deposit is an investment which offers higher rates of interests as opposed to a regular savings account. The deposit will be held by a fixed interest rate that can be either received by the account holder in regular intervals i.e. fortnightly, monthly, quarterly or yearly basis or upon maturity.

## Which is better FD or RD?

As you can see, after a year you will receive Rs 26324 in a fixed deposit while in RD you will receive Rs 25195. So the recurring deposit earns you Rs 1039 less than a fixed deposit.. The primary reason for this difference is that in FD you invest a lumpsum amount and so the entire money earns interest for one year.

## Which bank is best for fixed deposit in 2019?

Senior Citizen FD Interest Rates in 2019

The highest interest rate for senior citizen is offered by IDFC Bank and Bank of India at 8.25%.

## Which bank is best for FD 2019?

Compare Fixed Deposit Interest Rates 2019 in India

BankFD Rate of InterestSenior Citizen FD Rates
HDFC7.50% – 7.50%7.55% – 7.55%
PNB Housing Finance8.25% – 8.45%8.50% – 8.70%