Whether salaried individuals, small businesses, or families are looking to invest a risk-free lump sum, Punjab National Bank (PNB) FDs (Fixed Deposits) are always considered a reliable option. If someone invests ₹200,000 in an FD for 5 years, it’s crucial to know the total amount at maturity and the interest earned so they can plan clearly.
How is interest paid on PNB FDs
PNB FDs earn interest at a rate of approximately 6.5% per annum for a 5-year term. This interest is compounded annually, meaning the interest earned at the end of a year becomes the principal for the next year. This compounding process allows the FD funds to grow exponentially year after year. The biggest advantage of FDs is that they are not affected by market fluctuations, and returns are fixed from day one, so the investment is always safe.
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A Complete Calculation of a ₹2 Lakh 5-Year FD
If you open an FD of ₹200,000 with PNB for 5 years, assuming an interest rate of 6.5%, the total amount at maturity, based on compound interest, reaches approximately ₹276,084. This means that over these 5 years, you earn interest of approximately ₹76,084. This entire return is completely secure because the bank fixes the interest on the FD from day one, and the return at maturity is the same as initially stated.
Who is this FD plan best suited for
This plan is perfect for anyone who prefers risk-free investments. Employed individuals use bonuses or savings to invest in FDs to accumulate a substantial sum over a few years. Retired individuals seek stable interest rates, so FDs offer security. Family members also invest in such FDs to raise funds for major expenses like children’s education or home renovations. This also makes it a safe savings model for small businesses.
Where to use the maturity amount
The ₹2.76 lakh funds received after 5 years can be used for many important purposes. Whether it’s home renovations, children’s school fees, small business expenses, or setting aside money for emergencies, this amount provides a strong cushion without any risk. Many people renew their FDs to allow the funds to grow further.
If necessary, PNB FDs can be closed before maturity, but the interest may be slightly lower, and the bank may also impose a penalty. Therefore, if your goal is long-term, it’s best to let the FD run for the full 5 years to take full advantage of compound interest. This article is for general information purposes only. PNB FD interest rates are subject to change from time to time, so please check the bank’s current rates and terms before opening an FD. This is not financial advice.
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