What is the difference between simple and compound interest?

Simple interest is calculated only on the principal amount of a loan or deposit. In contrast, compound interest is calculated on the principal amount and also on the accumulated interest of previous periods. Essentially, you earn 'interest on interest,' which can significantly accelerate the growth of your money over time.

How does the compounding frequency affect my returns?

The more frequently interest is compounded, the faster your investment grows. Compounding monthly will yield a slightly higher return than compounding annually because the interest is calculated and added back to your principal more often, starting to earn its own interest sooner. This calculator allows you to see the difference between monthly, quarterly, half-yearly, and annual compounding.

What is the 'Rule of 72'?

The Rule of 72 is a quick, useful formula that is popularly used to estimate the number of years required to double the invested money at a given annual rate of return. The formula is: Years to Double = 72 / Interest Rate. For example, at an 8% annual return, your money would take approximately 9 years (72/8) to double.

Compound Interest Calculator

See the power of compounding and estimate your investment's future value.

Investment Details

Principal Amount₹10,000

Interest Rate (% p.a.)10.00%

Time Period (Years)5 Years

Compounding Frequency

Enter details to see the calculation.

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About the Compound Interest Calculator

Unleash the "eighth wonder of the world" to grow your wealth.

What is Compound Interest?

Compound interest is the "interest on interest." It is the powerful concept of reinvesting the interest you earn, rather than paying it out. This means that in the next period, interest is calculated on the principal sum plus all the previously accumulated interest. This process causes your wealth to grow at an accelerating rate. Albert Einstein famously called it the "eighth wonder of the world," and understanding it is fundamental to building long-term wealth.

How This Calculator Works

This tool empowers you to see the future of your money by calculating the future value of your investment using the standard compound interest formula. Simply use the intuitive sliders to input your initial investment (Principal Amount), the expected annual Interest Rate, and the Time Period in years. Crucially, you can also select the Compounding Frequency to see how your returns are affected when interest is compounded annually, half-yearly, quarterly, or even monthly. The calculator instantly shows you the projected maturity value, giving you a clear picture of your financial growth.

A = P(1 + r/n)^(nt)

A = the future value of the investment/loan, including interest.
P = the principal investment amount (the initial deposit or loan amount).
r = the annual interest rate (in decimal).
n = the number of times that interest is compounded per year.
t = the number of years the money is invested or borrowed for.

Practical Applications

This calculator is not just an academic tool; it's a practical guide for your financial journey. You can use it to plan for a variety of life goals:

Long-Term Investing: Project how your investments in mutual funds, stocks, or other assets can grow exponentially over decades, helping you visualize your path to financial independence.
Savings Goals: Whether you're saving for a down payment on a house, a new car, or a dream vacation, this tool can help you determine how much your savings in a high-yield account or fixed deposit will be worth in the future.
Retirement Planning: Project the growth of your retirement corpus to ensure you are on track for a comfortable future. Understand the impact of starting early and letting your money work for you over a long period.
Education for Kids: Estimate the future value of an investment made today for your child's future education costs, accounting for the rising cost of tuition.

Note: This calculator is for illustrative purposes. Actual returns on market-linked investments are not guaranteed and can fluctuate based on market conditions.