Compound Interest Calculator
Results
Principal Amount
₹1,00,000
Interest Earned
₹46,933
Total Amount
₹1,46,933
Amount Breakup
Other Interest Calculators
Compound Interest Formula
The Compound Interest calculator uses the following formula:
A = P × (1 + r/n)^(n×t)
Where:
- A = Final Amount
- P = Principal Amount
- r = Annual Interest Rate (in decimal)
- n = Number of times interest is compounded per year
- t = Time Period (in years)
Understanding Compound Interest
Compound Interest is interest calculated on both the initial principal and the accumulated interest from previous periods. This makes it more beneficial for long-term investments compared to simple interest.
Principal
Initial investment amount
Compounding
Frequency of interest calculation
Time Period
Duration of investment
How to Use This Calculator
- Enter the principal amount
- Input the annual interest rate
- Specify the time period in years
- Select compounding frequency
- Click Calculate Interest to see results
Compounding Frequencies
- Annually (once a year)
- Semi-annually (twice a year)
- Quarterly (four times a year)
- Monthly (twelve times a year)
- Daily (365 times a year)
Frequently Asked Questions
What is Compound Interest?
Compound Interest is interest calculated on both the initial principal and the accumulated interest from previous periods. This creates a snowball effect where your money grows faster over time.
How does compounding frequency affect returns?
Higher compounding frequency (e.g., monthly vs. annually) results in slightly higher returns because interest is calculated and added to the principal more frequently.
Where is Compound Interest commonly used?
Compound Interest is used in many financial products including savings accounts, mutual funds, fixed deposits, and some types of loans. It's particularly beneficial for long-term investments.
Why is Compound Interest better than Simple Interest?
Compound Interest generates higher returns over time because it earns interest on previously earned interest, creating a multiplier effect. This makes it more powerful for long-term wealth creation.
What is the Rule of 72?
The Rule of 72 is a quick way to estimate how long it will take to double your money. Divide 72 by the annual interest rate to get the approximate number of years needed to double your investment.