How to invest and calculate your fixed deposit interest rates in Nigeria
Fixed deposit interest rates – The stock in trade when you talk about banking is money, so long people would want to keep their funds with the bank for safety and investment purposes, banking will continue to thrive.
Apparently gone are the days people hid their money in earthen pots, earth itself and many strange places just to keep them safe for future use. All these have all changed now, thanks to technology and modern civilisation which can only get better even.
People keep their money in bank for so many reasons, however a greater percentage of these aim is simply to make more money, making this money is centered around varying parameters depending on the type of investment, on this note I introduce to you “Fixed deposit” as an investment.
WHAT IS FIXED DEPOSIT
This is an investment where you keep a certain sum of money with the bank, which its tenure will run for a specified period of time say 30, 60, 90 days and above, controlled by a negotiable rate which in part determines the extent of the return or interest.
Example: Say Mr Daniel Okeke wants to invest a certain fund in his account say N500k in a fixed deposit category. He will have to specify how long he wants this money to stay with the bank which is usually calculated in days 30, 60, 90 days and beyond as the customer deems fit. He will however negotiates a rate with the bank. Once the tenure of the investment expires, it will be terminated, could be rolled over subject to customer’s choice.
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WHAT IS FIXED DEPOSIT INTEREST RATES
This is the parameter usually which the Fixed deposit is centered upon as one of the interest or yield determinant factors usually calculated out of 100%, rate is however dependent on the tenure or period in which the investor wants to leave the money with the bank as well the principal or investment amount.
It’s worthy of note to understand that as much as you would want to invest your money with the bank looking at the fixed deposit interest rates as a yielding factor, there are as well disadvantages of running a fixed deposit.
ADVANTAGES OF A FIXED DEPOSIT
- Investment in fixed deposit no doubt offers guaranteed returns, uncertainties and risks are low
- It’s a flexible investment, you can invest any amount for a shortest period of one month that’s 90 days.
- Fixed deposit investment operates with a better and higher interest rate that leaving your money ordinarily in your savings account, you can as well borrow somewhere about 90% of your fixed deposit investment.
DISADVANTAGES OF FIXED DEPOSIT
- Fixed deposit returns are usually low compared to other investment options, as such may not appeal to every class of investor.
- If you by any means terminates your fixed deposit before the maturity date, you will be penalized or incur charges for it either on interest rate or penalty fee. To read elaborately on advantages and disadvantages of fixed deposit click here HERE
HOW THEN TO CALCULATE YOUR FIXED DEPOSIT INTEREST RATES
If you’d been having problem calculating your fixed deposit interest rates with your bank, let me have your undivided attention at this point because right here you’ll learn how to calculate it yourself before visiting your bank.
Example: Let’s say Mr Daniel Okeke wants to invest N500k with Polaris bank as stated earlier, and he is willing to leave this money with the bank for say 30 days, and after constructive negotiation they arrived at an interest rate of 7%. Calculate the interest rate due to Mr Daniel Okeke at the end of 30 days tenure of this investment.
Your age known interest method applies thus I = P X T /365X R/100
Where I = Interest, P = Principal, T = Time and R = Rate
From the example above the principal (P) = N500K, Time (T) = 30days while Rate (R) = 7
It therefore stands that I = 500,000 X 30/365 X 7/100
It therefore stands that for an investment of N500k on fixed deposit for 30 days at 7% will yield N2,876.65 as interest.
Looking at the above yield for N500k investment for one month, one will easily get discouraged with going further with the investment, but before you do, remember that fixed deposit yield is a function of interest rate, principal and of course how long you’re willing to leave the money. So when these parameters improve the yield will improve geometrically as well.
Let’s say Mr Daniel Okeke invested N3,000,000, for a tenure of 1 year. The rate will most likely be reviewed upward to about 14%.
It then stands that:
I = P X T X R/100
= 3,000,000 X 1 X 14/100
= 3,000,000 X 1 X 0.14
It then stands that the interest/yield for an investment of N3,000,000 is far ahead of what we had on N500k for just one month.
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FIXED DEPOSIT INTEREST RATES IN NIGERIA in 2019
There are no particular fixed deposit interest rates in the Nigerian banking sector, it stands to imply that a rate you obtain from one bank varies from that obtained from another, always bear in mind that these rates are negotiable with these banks. Your account officer is struggling to win a favorable rate for the bank while you are on course to increase your yield.
GTBANK FIXED DEPOSIT ACCOUNT INTEREST RATE
Banks vary in their fixed deposit interest rates, they are however not too far from the other giving that they operate in the same market and economic environment.
Gtbank rate guide as seen below, kindly note that the rates are subject to change and negotiable.
|AMOUNT||30 DAYS||60 DAYS||90 DAYS||180 DAYS|
|N100,000 – N1M||4.50||4.50||4.50||4.50|
|N1M – N10M||5.50||5.50||5.50||5.50|
|N10M – N25M||6.50||6.50||6.50||6.50|
|N25M – N50M||6.75||6.75||6.75||6.75|
|N50M – N100M||7.00||7.00||7.00||7.00|
UBA FIXED DEPOSIT INTEREST RATES
|AMOUNT||30 DAYS||30 DAYS||90 DAYS|
|N500,000 – N1M||2.00||5.00||5.50|
|N10M – N50M||2.00||5.00||6.00|
|N50M – N100M||2.50||6.00||7.00|
|N100M – N1B||3.00||6.50||7.50|
|N200M – ABOVE||3.50||7.00||8.00|
- Zenith Bank fixed deposit interest rates
- Diamond Bank fixed deposit interest rates
- First Bank fixed deposit interest rates, and many more, kindly visit any of their branches near you to make these enquiries yourself for a firsthand information.
To access a fixed deposit investment, kindly visit your bank and make request, you will fill a form on this regard as well give written instruction then negotiate favorable fixed deposit interest rates for your investments.
Raphael is a seasoned and dynamic writer, with interest in Banking, personal finance, entrepreneurial development. A councillor and motivational speaker.