What Will be the Monthly Interest for 20 Lakh FD?
If you want to invest your hard-earned money in a safe and secure manner, then you cannot go wrong with a good fixed deposit. Most Indians prefer to invest their money in fixed deposits and gain gradual interest amounts on the total sum. This is mainly because of the fact that fixed deposits provide a safe investment platform to investors who want to have guaranteed returns irrespective of how turbulent the market is.
This means that if you have a lump sum amount of money lying in your bank, then you can turn it into a fixed deposit to get guaranteed returns over a period of time. If you are planning to get INR 20 lakh fixed deposit interest per month, then you must be familiar with fixed deposit schemes. Today, we’ll help you with that.
What are Fixed Deposits – Cumulative FD and Non-Cumulative FD?
Fixed deposits are investment options that provide guaranteed returns. There are two types of fixed deposits that investors can opt for, including cumulative fixed deposits and non-cumulative fixed deposits.
In the case of cumulative fixed deposits, the interest amount is compounded and is payable to the investor at the time of maturity. On the contrary, in the case of a non-cumulative fixed deposit scheme, the interest is payable at fixed frequencies throughout the fixed deposit tenure. The payout options available during the non-cumulative fixed deposits are:
Ideally, an individual should invest in a fixed deposit scheme that provides the maximum amount of return. To understand that in a better manner, let’s try to find out the monthly interest on an INR 20 lakh fixed deposit.
Calculating the Monthly Interest on an INR 20 Lakh Fixed Deposit
Safeguarding your investments in a volatile market is extremely important. And if you want to invest your hard-earned INR 20 lakh in a risk-free investment option, then you should open a fixed deposit account.
This means that if you invest INR 20 lakh in a non-cumulative fixed deposit scheme with a tenure of 12 months, then the interest rate could be around 5.65%. It should be noted that this is just an average amount and the interest rate can vary from one bank to another.
However, for now, let’s proceed with the interest rate value of 5.65%. In that case, the investor will get a monthly interest of INR 9,416.67 for an INR 20 lakh fixed deposit. Within this same fixed deposit scheme, the investor will earn INR 28,250 every quarter, INR 56,500 every six months, and INR 1.13 lakh every year.
Beyond this, Indian banks usually offer an interest rate between the range of 2.7% to 5%. You can compare the interest rates offered on fixed deposits by different banks. Once you are satisfied with an interest rate value, then you can open a fixed deposit account within the same bank.
To make things clearer, if a bank is offering 4.5% of interest on a fixed deposit scheme, then you would get INR 7,500 per month as interest on an INR 20 lakh fixed deposit. The same bank will provide an interest amount of INR 22,500 every three months, INR 45,000 every six months, and INR 90,000 for the entire year.
When you compare both the interest rates, then it would make sense to opt for the bank that provides an interest rate of 5.65% on your fixed deposit in comparison to the bank that offers a return of 4.5%. You can similarly find out the interest amount that you would get for different interest percentages.
Benefits and Features of Investing INR 20 Lakh in a Fixed Deposit?
Till now we have talked about the amount of interest that one would get if he or she invested INR 20 lakh in a fixed deposit. However, what we have mixed till now is why one should choose to invest in a fixed deposit over other investment options.
Let’s look at some of those reasons why you need to invest INR 20 lakh in a fixed deposit over other investment options. These reasons are mentioned below.
- Guaranteed Returns: You must have heard that there is no guarantee in life. But the one thing that you can be guaranteed is your return on your fixed deposit scheme. Fixed deposit schemes provide a set amount of return to all investors after the maturity period. There are no surprises along the way and it allows the investors to invest their hard-earned money without a sliver of doubt in their minds.
- The Flexibility: Another great benefit of investing in a fixed deposit scheme is that you would have the flexibility to select the tenure, amount of money you invest, and the interest rate that you want to opt for. This is great in comparison to several other investment options that are available in the market.
- Reduce Your Investment Portfolio Risks: What if your investment portfolio is filled with risky investments? This is good if you are young and you have the necessary funds. But this won’t work in the long run. Most financial experts stress the importance of having a diverse financial portfolio. There should be risky and risk-free investments. This is why if you have been looking for a risk-free investment, then fixed deposits are the way to go.
- Easy Access to Credit: There are going to be many expenses in your life and there might be instances where you need easy access to credit. In those cases, your fixed deposit scheme would come to your aid. Most banks and financial institutes provide credit readily available to customers who have invested in a fixed deposit scheme with the bank.
- Flexibility to Fund Withdrawals: In the case of an emergency, you can quickly withdraw your funds without any hassle. This is something that is not advised usually due to the penalty associated with breaking a fixed deposit before maturity. However, it is a good solution during tough times and during your time of need.