Compound Interest Calculator
Visualize the power of compounding on your investments.
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The Magic of Compound Interest
Often called the "eighth wonder of the world," compound interest is the interest you earn on both your original principal and the accumulated interest from previous periods. It's essentially "interest on interest," and it's what makes long-term investments so powerful.
The Compound Interest Formula
The calculation is based on the standard compound interest formula:
A = P(1 + r/n)^(nt)
Where:
- A is the future value of the investment.
- P is the principal amount.
- r is the annual interest rate (in decimal form).
- n is the number of times interest is compounded per year.
- t is the number of years.
Frequently Asked Questions
How does compounding frequency affect my returns?
The more frequently interest is compounded, the faster your money grows. Compounding monthly will yield a slightly higher return than compounding annually, as the interest is added to your principal more often.
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