Finance

How Do I Calculate Return on Investment? Know Here

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People make investments with their parked money to keep them secure and also earn on the invested money. Investments can be of multiple types and include various schemes like FDs, Bonds stock, etc. to earn extra returns on their investments.

One of the effective ways to calculate the returns that you can get on your investments includes the ROI formula.

As the name suggests, the term reflects the performance of the investment mode and what is the investor gaining in return on his investments.

Returns on your investment can be calculated using fixed deposit interest calculators. How to use them is discussed later in the article.

ROI tries to measure the amount that an investor will earn at the end of his investment.

To calculate return on any investment the benefit from an investment is divided by the cost of investment and the result obtained is ROI ratio.

ROI = (current value of investment) – (Cost of investment) / cost of investment

Here, the current value of investment refers to the amount that can be obtained from the sale of the respective investment. 

Calculating your Return on Investment for Financial Schemes

Just like business investments, you can calculate what amount are you going to get at the end of your investment scheme. When talking about returns on investments schemes like Bonds, Stocks, etc. offer higher returns within a very limited period of time.

But again, these plans are not secure. Higher returns are not always assured, and they vary from time to time.

As compared to those, Fixed Deposit schemes are much safer and give assured returns. 

It has been made much easier to calculate returns on FD, you can calculate your maturity amount, i.e. the amount that you will gain at the end of the tenor of your FD. 

A = P (1 + r/4/100) ^ (4*n) and A = P (1 + r/25)4n.

Here,

A= Maturity Amount

P= Deposit Amount

n= compounded interest frequency 

r= rate of interest

However various banking and non-banking firms like Bajaj Finance offer special calculators for you. These calculators can be used to calculate the rate of interest you can earn on your FD.

Fixed Deposit Calculators are really useful for people who prefer laddering or investing their money in different plans for a different period.

Online FD Calculator helps you determine the maturity amount by taking up the compound interest on a monthly, quarterly, semi or annual basis.

How Does Fixed Deposit Calculators Work?

Fixed Deposits are one of the Indian investors favorite scheme. But now with Fixed Deposit calculators one can now easily do the math without scratching their heads off and choose the right plan for them.

FD calculators consider both simple and compound interest. In order to calculate Return on investment on their FD one needs to feed certain data like amount invested, tenor, interest rate, etc. 

How to use Bajaj Finance FD calculators?

Bajaj Finserv offers easy to use FD calculators on their website as well as on the app. One just needs to visit the website and go to the Fixed Deposit section, where they can find a tab for the calculator.

In case of application, the user needs to navigate through the FD section where they can find the FD calculator tool. Once you are on the calculator page feed the required blanks and tap on calculate button. Your results will be displayed on the next page.

Important points to consider

While using Bajaj Finance Fixed Deposit Interest Calculator, one should keep in mind some basic points, which are mentioned below:

  • Amount to be invested: 

Various banks and NBFCs nowadays offer FD schemes with a minimal deposit of about Rs. 1000. One needs to carefully choose what amount to invest in the scheme, as to withdraw money from the scheme before the maturity the investor may have to pay penalty charges.  

  • Interest Rates:

Different banks and non-banking institutes have different interest rates. Also, these interest rates vary from time to time and depend on the principal amount that is to be invested.

This is why investors are always suggested to do sufficient research at their end and opt for most convenient.

  • Maturity Period:

Maturity period is also called the Lock-in period as the principal amount that is invested is locked until the maturity period. And in case of emergency, the investor will have to pay a certain amount to withdraw the invested principal amount

  • Frequency of compound interest

The principal amount at the end of maturity period also depends on the number of pay-outs the investor opts for. Cumulative FDs offer higher amount as compared to the non-cumulative FDs

Making investments for your future is one of the smartest ways to secure your future financially. And in order to be secure, it is the responsibility of the investor to do proper research on the available investment options and choose the ones that are best suited for their investment portfolio.

Seema Gupta
Seema Gupta is a well-known financial and tech advisor with the abilities to keep a track and predict the market trends with the utmost accuracy. Her extensive knowledge in finance and tech is remarkable as she has worked on different financial and sectors dealing with the entire range of loans. She is also an expert in writing many finances and tech related articles and blogs, so she is a renowned finance blogger too

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