Compound Interest Calculator
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Note: We assume 365 days in a year for the calculation.
Incase any value is missing, the calculation will be skipped for that transaction.
Incase any value is missing, the calculation will be skipped for that transaction.
Understanding Compound Interest
Compound interest is the addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest. It is the result of reinvesting interest, rather than paying it out, so that interest in the next period is earned on the principal sum plus previously accumulated interest.
Formula
A = P(1 + r/n)^(nt)
- A = Final amount
- P = Principal (initial investment)
- r = Annual interest rate (in decimal form)
- n = Number of times the interest is compounded per year
- t = Time period in years
Benefits of Compound Interest
- Grows your money faster over time
- Creates a snowball effect as your investment increases
- Rewards long-term investors
- Helps beat inflation over time
- Works well with consistent, regular investments
Popular Investment Options in India
| Investment Type | Average Return | Risk Level | Taxation |
|---|---|---|---|
| Fixed Deposit | 5-7% p.a. | Low | As per income tax slab |
| Public Provident Fund (PPF) | 7-8% p.a. | Very Low | Tax-exempt (EEE) |
| National Savings Certificate | 6-7% p.a. | Low | Tax deduction on investment, interest taxable |
| Mutual Funds | 10-15% p.a. (equity) | Medium to High | LTCG: 10% above ₹1 lakh |
| ELSS | 10-15% p.a. | Medium to High | Tax deduction under 80C, LTCG: 10% above ₹1 lakh |