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Quarterly Compounding Formula:
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Quarterly compounding means that interest is calculated and added to the principal amount four times per year. This allows your investment to grow faster than simple interest or annual compounding, as you earn interest on previously earned interest.
The calculator uses the quarterly compounding formula:
Where:
Explanation: The formula calculates how much your investment will grow when interest is compounded quarterly over the specified time period.
Details: Proper fixed deposit planning helps you maximize returns, meet financial goals, and ensure financial security. Understanding compounding effects allows for better investment decisions.
Tips: Enter the principal amount in Indian rupees, annual interest rate in percentage, and time period in years. All values must be positive numbers.
Q1: What is the difference between quarterly and annual compounding?
A: Quarterly compounding calculates interest four times per year, while annual compounding calculates once per year. Quarterly compounding yields higher returns due to more frequent interest calculations.
Q2: Are fixed deposit interest rates fixed for the entire term?
A: Yes, in most fixed deposit schemes, the interest rate is fixed at the time of investment and remains constant throughout the deposit term.
Q3: What is the minimum investment period for fixed deposits?
A: Minimum investment periods vary by bank, but typically range from 7 days to 10 years for most Indian banks.
Q4: Are there penalties for premature withdrawal?
A: Yes, most banks charge a penalty (usually 0.5-1% lower interest rate) for premature withdrawal of fixed deposits.
Q5: Is TDS applicable on fixed deposit interest?
A: Yes, banks deduct TDS @ 10% if interest income exceeds ₹40,000 (₹50,000 for senior citizens) in a financial year.