Fixed deposit is a safe method of saving and investment commonly used by risk-averse investors. They offer assured returns that can be calculated beforehand. Fixed deposits are offered by banks, non-banking finance companies (NBFC) and the post office at varying rates of interest. The interest on fixed deposits compounds over time, ensuring that investors make good returns. The interest rate provided by the bank or financial institution depends on the prevalent FD interest rates.
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Post office fixed deposit interest rates
In the case of the post office fixed deposit, the interest rates are revised by the government at the start of each quarter. This calculation is made based on the yield of government securities. Based on these interest rates, the FD returns can be calculated using a post office fixed deposit calculator. Here are the rates of interest for post office FDs for the second quarter of FY22:
| Period | Interest rate |
| 1 year | 5.5% |
| 2 years | 5.5% |
| 3 years | 5.5% |
| 5 years | 6.7% |
Based on these interest rates, investors can calculate the returns they will receive upon maturity with a post office FD calculator. The total maturity amount can be calculated using the equation
A = P (1 + (r/400))^n
Where
A refers to the maturity amount
P is the principal amount
r stands for the interest rate
n is the number of quarters in the period chosen
Consider that the principal amount invested in the fixed deposit is Rs 2,00,000 for three years at an interest rate of 10%. So, A= 200000 x (1+(10/400)^ (4 quarters x 3 years) = Rs.2,68,978. The interest earned over three years when it is compounded quarterly is Rs.68,978.
Conclusion
The interest earned on a post office fixed deposit continues to increase as the number of years for which you have invested in the FD. With a post office time deposit calculator, you can get an estimate of the returns on your FD. A post office fixed deposit is a more attractive option for investors because post offices offer high interest rates.
