Earn ₹10,000 Monthly Interest with This Simple FD Investment Method

In a fast-growing economy, savings become pertinent and what better investment than a Fixed Deposit (FD), which is a reliable, low-risk and safe investment instrument.

What is a Fixed Deposit?

Fixed Deposit is a term deposit account, where a lump sum amount is deposited and locked in for a set time period, for instance 5 years, at a predetermined and fixed interest rate. This interest rate is not subject to market risk and remains fixed throughout the tenure, ensuring predictable and definite returns on investment. FD interest rates are often higher than the interest rates offered on savings accounts, making FD a better choice for saving purposes as well, with no risk of capital loss.

Premature withdrawal of the FD amount generally attracts penalties, which is around 1% of the applicable interest rate. The tenure of FD usually ranges from 7 days to 10 years, where some banks even extend it up to 20 years.

How to earn ₹10,000 interest per month?

Different banks offer interest payments on FD accounts for monthly, quarterly, half-yearly and annually tenures. In a non-cumulative FD, the principal amount is not reinvested, rather the interest is paid out periodically, generating stable and passive returns. The total yearly interest accrued on a non-cumulative FD account should be ₹1,20,000 to ensure a monthly income of ₹10,000. Therefore, the money needed to invest to generate a monthly interest of ₹10,000 depends on the particular interest rate offered by the bank. The FD interest rates in India typically range from 6% to 7.25% on a yearly basis. The following table breaks down the estimated different amounts of money required as per the interest rates offered:

It is to be noted that while a greater interest rate diminishes the total investment amount needed, as observed in the table above, investors should also factor in the tax deduction on the interest income, which can reduce the actual returns generated.