Our calculator helps you know how much income you will generate by investing the same amount to FD and Stock market. You can customize your calculations by choosing the time period of your investment, i.e., lumpsum or monthly investments.
Before calculating the returns lets understand about FD and stocks.
1) What is Fixed Deposit?
Fixed Deposit is a savings instrument offered by banks and NBFCs where one can deposit the money for a fixed time period to earn higher interest rate than savings account. The investment tenure ranges from 7 days to 10 years. Premature withdrawal of money from FD may incur penalty.
2) How is FD different from Savings account?
Savings account is the basic account which is created by the bank where one can deposit/withdraw his savings and earn interests as per the convenience. However, the interest rates on savings account is low as compared to FD, i.e. 3-4% only. In FD one cannot withdraw/deposit money whenever he wants to unlike savings account. Also, FD provides tax benefits to the investor which savings account doesn’t.
3) What is Recurring Deposit?
In simple words, depositing money in a fixed account monthly is known as Recurring Deposit (RD). It offers interest rates similar to FD.
4) What are the benefits of investing in FD or RD?
FD and RD are the risk-free investments which provides investor an assured sum of money at the maturity. It helps in getting tax deductions. It inculcates a habit of savings in an individual. They provide higher rate of interest compared to normal savings account. Thus, FDs and RDs are safe investment options with higher returns ranging from 7% to 9%.
5) What is Stock Market?
Stock market is a place where buyers and sellers exchange various instruments such as shares, bonds, etc.
6) How does one generate returns in stock market?
An investor buys a stock of a company that he finds to be good at the current price, and holds it to earn dividends or either sell it when finds a good deal or increase in price of the stock. The average returns of the stock market are between 10-20% in the past.
7) What are the benefits of investing in stock market?
An investor achieves capital gains and dividend income by investing in stock market. One can also benefit by the diversification and ownership of the stock.
8) Why is investing in stock market better than FD?
Stock market provides better returns than FD and the benefit to withdraw the money anytime. There is no lock-in period in stocks. It provides the benefit of diversification and increases returns with inflation.
9) How to choose between FD and Stocks?
It depends on the returns expected and risk-taking capacity of an investor. If one wants safer channel to grow the income in lesser time, opt for Fixed Deposits (FD) and if one has the capacity to take risks to generate higher returns, then go for stock market.