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FD Ladder Calculator

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This determines how many FDs you split your money into.

Your Strategy

Generate a customized FD laddering plan to manage your cash flow.

Understanding FD Laddering

FD Laddering is an investment strategy where you divide a lump sum investment into smaller amounts and invest them in Fixed Deposits with different maturity periods (e.g., 1 year, 2 years, 3 years, etc.).

Instead of locking all your money for 5 years to get a high rate (and losing liquidity), or putting it all in a 1-year FD (and risking reinvestment at lower rates), laddering gives you the best of both worlds.

Why Use the Ladder Strategy?

High Liquidity

Unlike a single long-term FD, one of your deposits matures every single year. This provides you with cash flow without paying premature withdrawal penalties.

Rate Averaging

You don't have to guess if interest rates are at their peak. Since you reinvest a portion every year, you average out the interest rate fluctuations over time.

How it Works: Real-World Example

Suppose you have ₹5 Lakhs to invest.

The Setup:
  • 1. Divide into 5 parts of ₹1 Lakh each.
  • 2. Open 5 FDs with tenures: 1 Yr, 2 Yrs, 3 Yrs, 4 Yrs, and 5 Yrs.
The Cycle:

When the 1-Year FD matures, you reinvest it for 5 Years. Next year, the 2-Year FD matures, and you reinvest that for 5 Years too. Eventually, you will have 5 FDs all earning the high 5-year interest rate, but one maturing every year!

Frequently Asked Questions about FD Ladders

Yes, you can break any individual FD. Since your money is split into multiple deposits, you only need to break one small FD (paying penalty only on that amount) rather than breaking one giant FD and losing interest on the entire corpus.

Absolutely. You can create a ladder using Bank FDs, Corporate FDs, or even Government Bonds. Just ensure you check the safety ratings (AAA is preferred) for corporate options.

Yes, interest from FDs is fully taxable as per your income tax slab. Banks deduct 10% TDS if interest exceeds ₹40,000/year (or ₹50,000 for senior citizens).
Important Disclaimer

The calculations provided are estimates assuming a constant interest rate for simplicity. In reality, interest rates for different tenures vary. This tool is for educational planning purposes only. Please consult your financial advisor before making investment decisions.

Strategy Tips
  • ✓ Emergency Fund: Use 1-year rung as emergency buffer
  • ✓ Auto-Renewal: Enable for passive ladder management
  • ✓ Perfect for: Retirees needing regular annual cash flow
Disclaimer

Calculations assume constant interest rates for simplicity. Actual rates vary by tenure. This is for educational planning only. Consult a financial advisor before investing.

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