Compound Interest Calculator
Determine how much your money will grow over time using the power of compounding.
Investment Summary
Principal Amount:
₹0.00
Total Interest Earned:
₹0.00
Total Future Value:
₹0.00
What is Compound Interest?
Compound interest is the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods. It is often described as "interest on interest."
The standard formula for compound interest is:
$$A = P \left(1 + \frac{r}{n}\right)^{nt}$$
Where:
- A = Final Amount (Future Value)
- P = Principal amount
- r = Annual interest rate (decimal)
- n = Number of times interest is compounded per year
- t = Number of years
Frequently Asked Questions (FAQs)
1. How is compounding frequency important?
The more frequently interest is compounded, the higher the final amount will be. For example, monthly compounding will yield slightly more than yearly compounding because your interest starts earning interest sooner.
2. What is the "Power of Compounding"?
It refers to the exponential growth of an investment over a long period. As time passes, the interest earned each year grows because it's calculated on an ever-increasing balance.
3. How does it differ from Simple Interest?
Simple interest is calculated only on the principal amount. Compound interest is calculated on the principal PLUS all of the interest that has accumulated in previous periods.