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Monthly Interest Formula:
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A Monthly Interest Payout Fixed Deposit is a type of investment where the interest earned is paid out to the investor every month, while the principal amount remains invested for the fixed tenure. This provides regular income while keeping the capital intact.
The calculator uses the formula:
Where:
Explanation: The formula calculates the monthly interest by converting the annual rate to a monthly rate and applying it to the principal amount.
Details: Accurate monthly interest calculation helps investors plan their regular income, budget effectively, and compare different FD schemes to choose the most beneficial option for their financial needs.
Tips: Enter the principal amount in currency units and the annual interest rate in percentage. Both values must be positive numbers to get accurate results.
Q1: Is the monthly payout fixed throughout the tenure?
A: Yes, for fixed rate FDs, the monthly payout remains constant throughout the investment period unless the interest rate changes.
Q2: How is monthly interest different from cumulative interest?
A: Monthly interest is paid out regularly, providing immediate income, while cumulative interest is compounded and paid at maturity, resulting in higher overall returns.
Q3: Are there any tax implications on monthly interest?
A: Yes, monthly interest income is taxable in the year it is received, according to your applicable income tax slab rates.
Q4: Can I withdraw my principal before maturity?
A: Premature withdrawal is usually possible but may attract penalty charges and revised interest rates as per the bank's policy.
Q5: Is monthly payout FD better than regular FD?
A: It depends on your financial needs. Monthly payout provides regular income, while regular FD gives higher returns at maturity due to compounding.