A compound interest calculator helps you estimate the growth of your investments over time with compounding. By entering the principal amount, interest rate, compounding frequency, and time period, you can instantly calculate the future value and total interest earned. This tool demonstrates the power of compounding and is essential for investment planning and wealth creation.
The compound interest is calculated using the formula:
A = P(1 + r/n)nt
Where:
Total Interest Earned = A - P
Compound interest is the interest calculated on the initial principal and also on the accumulated interest of previous periods.
Simple interest is calculated only on the principal amount, while compound interest is calculated on both principal and accumulated interest.
The Rule of 72 estimates how long it will take for an investment to double: Years to Double = 72 / Interest Rate.
Higher compounding frequency leads to higher returns as interest is calculated more frequently.
Compounding allows investments to grow exponentially over time, with returns generating their own returns.
Fixed deposits, mutual funds, stocks, bonds, and retirement accounts typically offer compound returns.
Start early, invest regularly, choose higher interest rates, and avoid frequent withdrawals.
Yes, compound interest can work against you in loans, credit cards, and mortgages, increasing the total amount owed.
Returns from compound interest are generally taxable as per applicable income tax laws.
Inflation reduces the real value of compound returns, so it's important to factor in when planning long-term investments.