Fixed deposits and their yearly yield.
A fixed deposit grows at the bank's rate compounded quarterly. How its maturity amount and yearly yield are worked out, with tax left out.
By Suraj Kumar3 min read
A fixed deposit is the plainest saving there is. Here is how it grows.
Quarterly compounding.
A deposit P at a yearly rate r compounded quarterly for t years comes to P(1 + r/4)^(4t). ₹1 lakh at 7% for 5 years comes to about ₹1.41 lakh.
The yearly yield.
Compounding makes the yield a little more than the rate: 7% compounded quarterly is about 7.19% over a year.
Tax.
Tax on interest depends on where you live and your income, so it is left out.
Further reading
Topics: fd calculator · fixed deposit interest · fd maturity · cd calculator · quarterly compounding
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