Enter an initial deposit, an interest rate (%), and term of a certificate of a deposit into the CD calculator to determine the final value of the CD.
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CD Return Formula
The following formula is used to calculate the return or final value of a certificate of deposit.
FV = IV (1 + r/m) ^ (t * m)
- Where FV is the final value
- IV is the initial value or deposit
- r is the annual interest rate
- m is the compounding frequency per year
- t is the number of years.
CD Return Definition
CD return is defined as the total monetary value return on the investment of a certificate of deposit purchase.
How to calculate return on a certificate of deposit?
Time needed: 10 minutes.
How to calculate the return on a certificate of deposit
- Determine the total initial value
This would be equal to the total cost of the CD times the number of certificates purchased
- Determine the rate of return
Determine the yearly rate of return of the CD in percent
- Determine the total term of the CD
Find out how long the CD is invested for in number of years.
A certificate of deposit, or CD, is a type of investment that typically yields higher returns than a savings account but has a fixed term length and must be re-drawn at the end of the investment term.
That depends on the individual. The CD is an extremely safe investment that will return a fixed %, but will also keep you money locked up for the term.
It’s best to keep a balance of both CDs and stocks in an investment portfolio. CD’s are extremely safe, but won’t yield the same returns as other investments.