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How to plan monthly returns in a fixed deposit?

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While earning money is an important aspect of every individual’s life, saving and investing money in the right avenues is equally important. By doing so, your idle money can also earn you handsome returns in the short and long run. If you have managed to save a lump sum then it is advisable to start looking for different investment tools that can help you earn steady monthly returns from your investment.

Benefits of Fixed Deposit Monthly Scheme

One of the best ways to plan a monthly return on your investment is by creating a Fixed Deposit. A Fixed Deposit is an investment instrument offered by the banks wherein you can deposit a certain amount for a specific period of time. Based on your financial planning, you can either go for a cumulative FD or a non-cumulative FD option.

Check out some of the best-in-class benefits offered by monthly interest payout fixed deposit schemes are mentioned below:

  • FDs can be a great source of passive income
  • Monthly payout FDs are relatively safe as an investment instrument 
  • The monthly payout FD schemes are flexible and have a very high upper limit on the investment amount.
  • Interest received on a monthly income scheme is higher than that in savings accounts.
  • The investment in a monthly payout FD offers higher liquidity.
  • In emergencies, instead of breaking the FD that incurs a penalty, you can opt for a loan against your FD, up to a maximum of 75% of your FD value.

Like in most other financial instruments, the higher the value of Fixed Deposit investment and the longer the tenure, the more the investor tends to earn. For example, a 20 Lakh FD interest per month will definitely offer higher monthly returns in the long term.

Calculating Monthly Interest on Fixed Deposit

Here’s the compounding formula to calculate simple interest FD for monthly payouts:
M = P + (P x r x t/100)

where,
1. M = Monthly interest payout
2. P = Principal/deposit amount
3. R = Rate of interest
4. T = Tenor

Monthly payout fixed deposits also have a premature withdrawal facility that allows you to close the FD before attaining the maturity date. However, you need to pay some amount as penalty charges to the bank to avail of the premature withdrawal facility, which ranges from 0.5% to 1% of the invested amount.

Why Should You Opt For an FD?

  1. Safe investment – FDs are one of the safest investment options in the market. Moreover, investors can even opt to invest in a company FD over a bank FD.
  2. Guaranteed returns – Compared to most investing instruments, Fixed Deposits guarantee a return on your investment. Banks share the interest rate chart with the investors as well.
  3. Ideal during market fluctuations and volatility – Fixed Deposits are relatively safer financial instruments, especially during highs and lows of the market.
  4. Flexibility in interest payout frequency – Investors can decide their FD tenure, anywhere between 12 months to 60 months, and calculate their monthly returns based on the tenure.

In Conclusion:

A fixed deposit is an all-time popular investment tool and it is advisable for every investor to have an FD that can offer security and financial support during emergencies. You can easily plan for monthly returns that can help you manage your finances and planning budget, by investing in a fixed deposit.

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