Compound Interest Calculator

A Compound Interest Calculator is a powerful financial tool that calculates the total amount you'll accumulate when interest is earned not just on your principal, but also on the accumulated interest from previous periods. This "interest on interest" effect creates exponential growth over time.

Why it matters: Compound interest is the cornerstone of wealth creation. Albert Einstein reportedly called it the "eighth wonder of the world." Understanding compound interest helps you appreciate the power of long-term investing and the cost of long-term borrowing.

Our Compound Interest Calculator demonstrates the power of compounding with different frequencies and scenarios.

Key Benefits:

• Visualize Growth: See how your money grows exponentially over time
• Compounding Frequency: Compare monthly, quarterly, and annual compounding
• Long-Term Planning: Understand how time amplifies returns through compounding
• Rule of 72: Quickly estimate how long it takes to double your money
• Goal Setting: Calculate what principal or rate you need to reach your target

The Compound Interest Calculator uses the standard compound interest formula:

Formula:

A = P × (1 + r/n)^(n×t)

Where:

• A = Final Amount (principal + interest)
• P = Principal (initial investment)
• r = Annual interest rate (in decimal)
• n = Number of times interest is compounded per year
• t = Time in years

Compound Interest = A - P

Example:

Principal: ₹1,00,000

Interest Rate: 12% per annum

Time: 10 years

Compounding: Annual

A = ₹1,00,000 × (1 + 0.12)^10 = ₹3,10,585

Compound Interest = ₹2,10,585

With monthly compounding, the same investment would grow to ₹3,30,039, demonstrating the benefit of more frequent compounding.

Using our Compound Interest Calculator is simple:

Step 1: Enter Principal Amount

Input your initial investment or deposit amount.

Step 2: Set Interest Rate

Enter the annual interest rate you expect to earn.

Step 3: Choose Compounding Frequency

Select how often interest is compounded - monthly, quarterly, half-yearly, or annually.

Step 4: Set Time Period

Choose how long you plan to keep your money invested.

Step 5: View Results

See your final amount, total interest earned, and the growth multiplier.

Pro Tip: Try the same calculation with different compounding frequencies to see how it affects your returns.

1. Power of Compounding

Visualize how compound interest creates exponential growth over time.

2. Time Value Appreciation

Understand why starting early is crucial - time is your biggest ally.

3. Frequency Comparison

See how more frequent compounding increases your returns.

4. Goal Planning

Calculate what you need to invest to reach specific financial goals.

5. Rule of 72 Validation

Verify the doubling time of your investments (72 ÷ interest rate = years to double).

6. Debt Awareness

Understand why high-interest debt compounds against you.

7. Investment Comparison

Compare different investment options with varying rates and compounding.

8. Long-Term Motivation

See the dramatic difference that consistent long-term investing makes.