In a fast-growing economy, savings and stable investments have become increasingly important. Among the safest investment options available, Fixed Deposits (FDs) remain a reliable and low-risk choice for investors seeking predictable returns.
What is a Fixed Deposit (FD)?
A Fixed Deposit is a term deposit investment where a lump sum amount is deposited with a bank for a fixed tenure, such as 5 years, at a predetermined interest rate.
Unlike market-linked investments, FD interest rates remain fixed throughout the tenure, ensuring stable and predictable returns without market volatility.
FD interest rates are generally higher than those offered on regular savings accounts, making them a preferred option for conservative investors looking for secure returns.
However, premature withdrawal of an FD usually attracts a penalty, often around 1% of the applicable interest rate.
The tenure of an FD typically ranges from 7 days to 10 years, although some banks may offer longer-duration deposits.
How to Earn ₹10,000 Monthly Interest from an FD
Several banks offer non-cumulative fixed deposits where the interest is paid monthly, quarterly, half-yearly, or annually instead of being reinvested.
In a non-cumulative FD, the principal amount remains unchanged while the interest is paid out periodically, creating a stable source of passive income.
To earn approximately ₹10,000 per month, the total yearly interest generated should be around ₹1,20,000.
The investment amount required depends on the FD interest rate offered by the bank.
Currently, FD interest rates in India generally range between 6% and 8% annually.
The table below shows the approximate investment required to generate a monthly income of ₹10,000 through FD interest.
| Interest Rate | Required Investment |
|---|---|
| 6% | ₹20 lakh |
| 7% | ₹17.14 lakh |
| 7.25% | ₹16.55 lakh |
| 7.5% | ₹16 lakh |
| 8% | ₹15 lakh |
Important Things to Keep in Mind
While higher FD interest rates reduce the total investment amount required, investors should also consider taxation on interest income, which can reduce actual returns.
Additionally, senior citizens often receive slightly higher FD interest rates compared to regular investors, which may further improve monthly income generation.
Before investing, it is advisable to compare FD rates across banks and understand the payout frequency, penalty charges, and tax implications.