Decoded: How Much Should You Invest in a Fixed Deposit to Earn ₹1 Lakh

Let’s assume you invest ₹70,000 in a Fixed Deposit for a tenure of 5 years at an interest rate of 7.20%. Considering you have cumulative FD, where interest pay-out would happen only at the end of the FD tenure, i.e., 5 years – upon calculation , your ₹70,000 deposit would grow to approximately ₹₹1,00,012. But does that mean you have earned ₹1 lakh? No.

The interest you have earned on your FD is the ₹1,00,012 - ₹70,000 = ₹30,012. So, how much should you invest in a Fixed Deposit and for what tenure to earn ₹1 lakh interest. Keep scrolling to know more.

Understanding Fixed Deposit Interest Pay-Outs

When you open an FD account, you have the option to choose from interest pay-out frequency, which could be monthly, quarterly, at maturity. If you opt for periodic interest pay-outs i.e., monthly or quarterly, the interest earned does not get compounded without being added to the principal amount. Hence, for non-cumulative FDs simple interest calculation method is used. To be honest, without compounding, it’s difficult to grow your money quickly. That said, those seeking regular interest income from FDs can select periodic interest pay-outs (non-cumulative Fixed Deposits).

In this blog, we will primarily focus on cumulative Fixed Deposits, where interest pay-out happens at the time of FD maturity.

Calculations

We will consider different tenures and investments to calculate your interest earnings. To calculate in a hassle-free way, we have used Ujjivan Fixed Deposit Returns Calculator.

Scenario 1

Let’s assume you invest ₹2,40,000 lakh in Fixed Deposit for a tenure of 5 years. The interest rate applicable for a 5-year is 7.20% (check with your bank for the latest FD rates). Considering you have opted for interest pay-out at the time of FD maturity, your interest earnings would be ₹1,02,899.

Scenario 2

Interest pay-out remains the same. But assume that you invest ₹2,15,000 in Fixed Deposit for a tenure of 6 years. The applicable interest rate for a 6-year FD is 6.50% (check with your bank for the latest FD rates). Your interest earnings would be ₹1,01,557.

It’s important to consider the tenure and applicable interest rate before booking an FD.

Disclaimer: The above example is for illustration purpose only. Ujjivan Small Finance Bank doesn't take any responsibility for the accuracy of information. To check Ujjivan Fixed Deposit interest rates, click here.

Why Choose Ujjivan for Fixed Deposit?

1. Higher Interest Rates

   Ujjivan offers one of the best FD interest rates in the market. Thanks to the power of compounding, your savings grow faster if parked in Ujjivan Fixed Deposit.

2. Select Tenure of Your Choice

   For regular and callable FDs, the FD tenure ranges from 7 days to 10 years. You have the flexibility to select the tenure of your choice that aligns with your financial goals.

3. Low-Risk Investment

   Unlike investment instruments like mutual funds, where your wealth growth is directly linked to market performance, FDs are not market-linked and offers guaranteed returns. Also, investments up to ₹5 lakh is insured under DICGC per depositor per bank.

4. Book an FD From Anywhere

   Ujjivan offers Digital Fixed Deposit. As the name suggests, you can open your FD from anywhere. Just ensure to keep your PAN and Aadhar card in handy for Video KYC.

5. Tax Saving Option

   If you’re seeking tax saving investment options, Tax Saver FDs is one option you can consider. With tax-saver FDs, you can claim tax deduction up to ₹1.5 lakh under Section 80C of the Income Tax Act.

6. 100% Safe and Secure

   Ujjivan is regulated by the Reserve Bank of India (RBI). Your investment is completely safe with Ujjivan.