1. What is National Savings Certificate (NSC)?

The National Savings Certificate (NSC) is a fixed income investment scheme offered by the Sri Lankan government. It provides guaranteed returns with monthly compounding interest, making it a popular savings instrument for risk-averse investors.

2. How Does the Calculator Work?

The calculator uses the NSC maturity formula:

Where:

• \( P \) — Principal investment amount (LKR)
• \( r \) — Annual interest rate (in decimal)
• \( n \) — Investment period in years

Explanation: The formula calculates compound interest with monthly compounding, which means interest is calculated and added to the principal each month.

3. Importance of NSC Calculation

Details: Calculating the maturity value helps investors plan their finances, compare investment options, and understand the power of compounding in long-term savings.

4. Using the Calculator

Tips: Enter principal amount in LKR, annual interest rate in decimal (e.g., 0.08 for 8%), and investment period in years (can be fractions like 2.5 years). All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: What are current NSC interest rates in Sri Lanka?
A: Rates vary by year and certificate type. Check with the National Savings Bank for current rates (typically 8-12% for different tenures).

Q2: Is NSC interest taxable?
A: NSC interest is generally tax-free in Sri Lanka, making it more attractive than taxable investments.

Q3: What is the minimum investment period?
A: Typically 1 year, but longer periods (3-5 years) usually offer higher interest rates.

Q4: Can I withdraw before maturity?
A: Premature withdrawals are usually allowed but may incur penalties or reduced interest rates.

Q5: How does monthly compounding benefit investors?
A: Monthly compounding yields higher returns than annual compounding as interest earns interest more frequently.