In how many days will a fund of Rs 1 crore be created from an FD of Rs 5 lakh, does one get the benefit of compounding on this as well..

Investment Tips: As soon as the name of a bank FD comes to mind, most people think of a guaranteed return and increasing money without risk. This is the reason why most people invest in FD. Especially, this is the most favorite scheme of the elderly, and after retirement, most people invest money in it. But have you ever thought about how many days the investment made in an FD can make you a millionaire?

Suppose you have made a lump sum investment of Rs 5 lakh in FD, then in how many days will your money become a huge fund of Rs 1 crore? The second thing is whether the benefit of compounding is available on FD, or simple interest is given on it. Compounding means whether the interest received on the investment is also given interest next time or not. As is the case with mutual funds.

Does interest get on FD? Like mutual funds, compound interest is also available on FD. This means that interest on FD received in one year is also paid in the next year. In such a situation, like mutual funds, here also the benefit of interest on interest is available. Now, if you have to create a fund of Rs 1 crore by investing in FD, then how much time will it take at what interest rate? Let us calculate this.

How much time will it take at what interest rate?

Many small finance banks offer 8 to 9 percent interest on FD, while senior citizens get more than 9 percent interest annually. However, the interest rate of big banks remains between 7.5 and 8 percent, while SBI gives only 6 percent interest on a short term period. In this way, according to every interest rate, one will have to wait for different periods to create a fund of Rs 1 crore from an amount of Rs 5 lakh.

How much time to reach one crore
If you have made an FD of Rs 5 lakh and got 9% annual interest, then it will take 30 years to reach 1 crore.
If you get 8% annual interest on FD, then a fund of 1 crore will be ready in 32 years.
If the bank gives you 7% annual interest on FD, then a fund of 1 crore will be ready in about 35 years.
It is clear that depending on the interest, it may take you 30 to 35 years to make a fund of 1 crore from an FD of 5 lakh.

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