Compound Interest Calculator

A compound interest calculator simplifies compound interest calculations by eliminating the need for manual calculations. It can be used to determine the returns on investments that give compounding returns, such as mutual funds. It can be a handy tool that simulates the growth of investments over time.

To calculate compound interest, you’ll need three components: the principal amount, the interest rate, and the length of time the money is invested. A formula box on the compound interest calculator allows you to enter the compounding frequency, principal amount, rate of interest, and duration. The calculator will show you how much your investments will be worth in the future.

A compound interest calculator can help you provide numbers that represent your returns made from an investment. It is an extremely useful tool that offers extensive benefits to investors. Here are some of the key benefits of using a compound interest calculator: -

The power of compounding calculator can assist you in comprehending how compounding contributes to long-term wealth creation using different types of investments instruments such as fixed deposits, recurring deposits, mutual funds, and Kisan Vikas Patra etc. You can use this calculator to make crucial financial decisions and manage your investments efficiently.

Here are some benefits of using a compound interest calculator in India:

Here's how our compound interest calculator can be used to determine the maturity value of your investments:

 Step 1: First, you must assess the amount of your total investment, which is known as the principal amount. You can use the slider on the compound interest calculator to see how a different principal amount will affect the maturity value.

Let's take the lumpsum investment amount to be Rs 10,00,000 (Rs 10 lakhs) in this scenario.

 Step 2: Choose the rate of interest using these buttons: < or >. In this case, we're going ahead with an 8% of ROI.

 Step 3: You must select a time period or tenure for payment using the same < or > buttons. This is the duration for which you will be making the regular payments. Let's keep it 10 years for our example.

If you choose the expected rate of return (per annum) to be 8% for a lumpsum amount of Rs 10,00,000 invested for a period of 10 years, here's what your returns will look like at the end of the investment period:

Compounding is the term used to describe the process where you receive 'interest on interest'.

This happens when the profits from your investment are re-invested in the same investment option. In simpler terms, compounding enables you to earn interest on both the main and the accrued interest of your loan. Thus, the power of compounding can help you enormously increase your return on investment over time.

All you have to do is select your preferred investment instrument like PPF or even Voluntary Provident Fund (VPF) and invest frequently and steadily over time to see your savings multiply.

This way, you may achieve your financial objectives considerably more quickly and with lesser effort.

If you aren't used to performing complex numbers, comprehending the power of compounding math may appear challenging. Fortunately, there are numerous compound interest calculators online that can assist you in swiftly estimating the returns you are expected to receive.

The basic principle of compound interest is earning interest on interests. It makes money grow faster as more and more interest gets accumulated with time. The power of compounding creates a snowball effect since the initial investments grow along with interest earned from the investment.

The more time you give your investments to grow, the higher your returns will be. That is why saving early makes a difference. It puts the power of compounding in your favour and helps you fulfil your long-term financial objectives.

• This is the interest that is earned on both the principal amount and the interest amount.
• A = P (1+r/n) ^ (n * t)
• Where,
• A = Maturity amount
• P = Principal amount
• r = rate of interest in decimals
• n = number of compounding in a year
• t = number of years
• Now that you know the compound interest formula let's use it to calculate compound interest. For a deposit amount of Rs.10,000 that is kept for a tenure of 3 years at a quarterly compounding interest rate of 10%, the interest at the time of maturity would be:
• A= 10,000 {1 + (0.1/4)} ^ (4 * 3)
• A = 10,000 (1 + 0.025) ^ (12)
• A = 10,000 (1.025) ^ (12) = Rs. 13,449 (approximately)
• Compound Interest (CI) = Maturity Amount - Principal Amount
• CI = 13,449 - 10,000 = Rs. 3,449
• Maturity amount at the end of the 3-year deposit tenure: Rs.10,3449

Compounding frequency refers to the number of times interest is calculated in a year. When deciding between simple and compound interest, compound interest is always the winner. There is, however, a way to make compound interest work harder for you. You can also look at how often the interest is compounded when choosing an investment option that offers compound interest.

The amount of compound interest increases as the frequency of compounding increases.

The most common compounding frequencies are daily, weekly, monthly, quarterly, half-yearly, and annually. Choosing a daily compounding frequency means that your interest is compounded every day.

As a result, based on the interest added to your initial investment, you will earn a fresh sum every day. Similarly, for other frequencies, the interest will be compounded at the decided intervals.

It's critical to start saving and investing as soon as possible to get the most out of your compound interest investment. The more time you give your money to compound and increase, the more money you will have.