FD Calculation: Investing Rs 5 Lakh In Fixed Deposit? Here's How Much It Will Give You In 5 Years

Fixed deposits are a critical investment tool offered by banks to investors to save and grow wealth. While the returns on FDs are not very attractive when inflation is factored in, they play an important role in balancing one's portfolio. People opt for FDs due to their fixed return policy and convenient investment durations, which offer more flexibility.

Different banks offer varied interest rates on FDs. Returns can vary depending on the amount and the investment duration. Notably, banks revise FD rates after rate cuts by the Reserve Bank of India's Monetary Policy Committee.

Secure returns and risk-free nature of FDs make them a convenient option to add to one's portfolio. 

You can choose different amounts across various tenures for FD investments. Generally, FDs are preferred for short-term financial goals. Banks allow FD investments as low as Rs 1,000 and the tenure may range from one month to 10 years.

Calculations show that for a period of five years, FDs may not be able to beat their more attractive, high risk counterparts like stocks and mutual funds. However, FDs could be a good choice if you are looking for secure returns.  

Let Us See How FD Investment Over Five Years Can Grow:

Here's what Rs 5 lakh invested in an FD for five years can fetch you: 

Tenure: Five years

Amount: Rs 5 lakh

Interest Rate: 6.75%

You would receive interest of Rs 1.98 lakh on an FD of Rs 5 lakh for five years, if you invest the amount today, May 14.

Interest earned in FY26: Rs 30,335

Interest earned in FY27: Rs 36,715

Interest earned in FY28: Rs 39,339

Interest earned in FY29: Rs 41,889

Interest earned in FY30: Rs 44,879

Interest earned in FY31: Rs 5,593

This calculation is based on the assumption that the interest accrued was reinvested into the FD instead of being paid by the bank periodically. In this case, the interest is capitalised or added to the principal amount once every quarter.