Among the most popular financial types in India are fixed deposits. My father also invests his whole hard-earned cash in fixed deposit plans provided by banks all around the country. You must be aware of the many kinds of fixed deposits. So you must know the cumulative deposit meaning.
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What is the meaning of the cumulative deposit?
The word "cumulative" means to accumulate. Interest on the total amount placed in one lump payment is collected until the completion of the maturity term with a cumulative deposit. The cumulative interest in this case refers to the addition of the prior investment or the reinvested interest from a single year. The principal amount rises as a result of the boosted interest.
In event of a cumulative FD, compounding is most effective. A cumulative FD is one in which you receive the sum of your initial investment plus any interest earned when it matures. A cumulative FD with a lengthy period typically earns more interest. So now you know what is cumulative deposit.
Why should you invest in the cumulative deposit?
The best type of fixed deposit to choose from if you are not relying on periodic interest income is a cumulative fixed deposit. Therefore, if you are a paid employee or a person with significant company profits, you can choose to invest in cumulative fixed-income securities. You can enrol in cumulative FD if you intend to save up a substantial quantity of money for future activities. Keep in mind that the cumulative FD choice is only appropriate if you can live without receiving interest payments on a consistent basis.
What is the example of a cumulative deposit?
Now, let's use an illustration. At maturity, you will earn Rs. 2,20,000 if you put Rs.2 lakh in a cumulative FD with an institution for a year at a 10% interest rate. This is the total of the capital and interest received over the course of a year.
If you choose a cumulative FD, your returns will be maximised. In a cumulative FD, interest collected is routinely reinvested in the initial deposit amount. As a result, the interest you received during the previous stage is credited back to your initial principal.
This is all about the cumulative deposit meaning.
Read More: What is the maximum deposit amount insured by DICGC? How to renew a fixed deposit? Can we withdraw money from the fixed deposit before maturity? What is a basic savings bank deposit account?Your Feedback Matters! How was this Answer?
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What is cumulative deposit?
Aksar
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2 Year
2022-08-29T18:13:10+00:00 2022-08-29T18:13:11+00:00Comment
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