Compound Interest Calculator Explained

Compounding interest means you earn interest on your principal as well as on the interest accumulated previously, which makes your wealth grow exponentially over time.

Compound Interest Formula

To calculate total amount (principal + interest):

A = P × (1 + r/n)^(nt)

Where:
A = Total accumulated amount
P = Principal amount
r = Annual interest rate (in decimal)
n = Number of times interest compounds per year
t = Time period in years

Example

If you invest ₹50,000 at an annual interest rate of 10% compounded yearly for 5 years:
Year 1 interest = 50,000 × 10% = ₹5,000
Year 2 interest = (50,000 + 5,000) × 10% = ₹5,500
Year 3 interest = (55,000 + 5,500) × 10% = ₹6,050
and so on, growing exponentially.

Benefits of Using a Compound Interest Calculator

• Determines exact returns and investment growth over time.
• Helps in planning for future financial goals and required corpus.
• Adjustable compounding frequency to suit different investment types.
• Eliminates manual calculation errors and saves time.