1. What is an FD vs PPF Calculator?

Definition: This calculator compares Fixed Deposit (FD) returns using compound interest against Public Provident Fund (PPF) returns.

Purpose: It helps investors understand potential returns from these common investment options to make informed decisions.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

Where:

• \( P \) — Principal amount ($)
• \( r \) — Annual interest rate (decimal)
• \( n \) — Investment period (years)

Explanation: The principal grows exponentially based on the interest rate and time period.

3. Importance of FD vs PPF Comparison

Details: Understanding these differences helps in financial planning, tax optimization, and choosing between guaranteed returns (FD) vs long-term savings (PPF).

4. Using the Calculator

Tips: Enter the principal amount, interest rate (default 5%), and investment period in years (default 5). All values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: How is FD different from PPF?
A: FD offers fixed returns for fixed periods, while PPF is a long-term savings scheme with tax benefits and changing interest rates.

Q2: What's a typical FD interest rate?
A: Rates vary by bank but typically range from 4-7% for general public.

Q3: Does this calculator include taxes?
A: No, FD interest is taxable while PPF is tax-free - consider this in your comparisons.

Q4: Which is better for short-term investments?
A: FD is generally better for periods under 5 years due to PPF's 15-year lock-in.

Q5: How often is interest compounded?
A: Most FDs compound quarterly while PPF compounds annually - this calculator assumes annual compounding for both.