FD Required Principal Calculator

Enter the target interest income and FD rate to instantly see the principal needed. Values are pre-tax.

₹
% p.a.
Assume monthly compounding to convert the nominal annual rate to an effective annual rate when calculating the principal.
Tip: Enable if interest is credited monthly/quarterly; disable for simple annual payout.
Please enter a positive target and a valid rate greater than 0.

Required principal

₹0
Enter values to see the result.
Simple mode: Principal = Annual target / (rate/100). Compounding mode uses an effective annual rate based on monthly compounding.

About this tool

This FD Required Principal Calculator helps estimate the fixed deposit amount needed to earn a target interest income either per month or per year at a specified FD interest rate (pre-tax).

What this tool does

  • Converts a target income (Monthly or Yearly) into the equivalent annual target.
  • Uses the provided annual interest rate to compute the principal needed to generate that income before taxes.
  • Optionally applies a compounding estimate by converting the nominal annual rate to an effective annual rate assuming monthly compounding.
  • Formats numbers in the Indian numbering system (e.g., 1,00,000).

How it works

  • If “Yearly” is selected, Annual Target = Entered Target.
  • If “Monthly” is selected, Annual Target = Entered Target × 12.
  • By default (simple mode), it treats the rate as a flat annual rate without compounding adjustments.
  • If “Compounding estimate” is enabled, it converts the nominal annual rate r to an Effective Annual Rate (EAR) assuming monthly compounding and uses EAR in the calculation.

Formulas

Simple mode (no compounding adjustment):

Principal = Annual Target / (r / 100)

Compounding estimate (monthly compounding):

EAR = (1 + r/100 ÷ 12)^12 − 1

Principal = Annual Target / EAR

Note: This compounding estimate is for guidance when interest is credited more frequently; actual bank crediting/compounding rules may vary.

Example

Target ₹60,000 per year at 7.01% (simple):

Principal ≈ 60,000 ÷ 0.0701 ≈ ₹8,56,061

With compounding estimate (monthly), EAR will be slightly higher than 7.01%, so the required principal will be slightly lower than in simple mode.

Important considerations

  • Taxes: Results are pre-tax. Banks may deduct TDS on interest above thresholds; post-tax income will be lower unless eligible declarations are made.
  • Bank policies: Interest payout frequency and compounding rules vary (monthly/quarterly/half-yearly/annually), influencing effective rate and payouts.
  • Tenure: FD rates depend on tenure; choose rates applicable to the intended duration.
  • Senior citizen rates: Higher rates may apply; input the applicable rate for accurate results.

When to use compounding estimate

  • Enable when interest is credited monthly/quarterly and the bank advertises a nominal annual rate.
  • Disable when interest is paid annually without interim compounding adjustments, or when only a simple annual payout is needed.