Compound Interest Calculator
Witness the magic of compounding. Calculate the future value of your investments and understand how your money can grow exponentially.
Inputs
Results
Principal Amount
₹1,00,000
Total Interest
₹1,15,892
Maturity Value
₹2,15,892
Understanding the Power of Compound Interest
Our Compound Interest Calculator is a powerful tool that helps you understand one of the most important concepts in finance: compound interest. It allows you to see how a small initial investment can grow into a large sum over time by earning interest not just on your principal but also on the accumulated interest.
How to Use Our Compound Interest Calculator
- Enter the initial amount of your investment in the 'Principal Amount' field.
- Input the annual interest rate in the 'Annual Interest Rate (%)' field.
- Specify the number of years you plan to invest for in the 'Investment Period (Years)' field.
- Select how often the interest is compounded from the 'Compounding Frequency' dropdown (e.g., Annually, Monthly).
- Click 'Calculate' to see the total future value of your investment and the interest earned.
Frequently Asked Questions (FAQs)
What is compound interest?
Compound interest is the interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan. It is often called "interest on interest" and is the reason why investments can grow exponentially over time.
How is compound interest calculated?
The formula for compound interest is A = P(1 + r/n)^(nt), where A is the future value of the investment/loan, including interest, P is the principal amount, r is the annual interest rate, n is the number of times that interest is compounded per year, and t is the number of years the money is invested or borrowed for.
What is the difference between simple and compound interest?
Simple interest is calculated only on the principal amount of a loan or deposit, while compound interest is calculated on the principal amount and also on the accumulated interest of previous periods. This means that with compound interest, your money grows at a faster rate.
How often is interest compounded?
The compounding frequency can vary. It can be daily, monthly, quarterly, half-yearly, or annually. The more frequently interest is compounded, the greater the amount of compound interest will be.