Compound Interest Calculator
Calculate how your investment grows with compound interest
Calculation Results
What is Compound Interest?
Compound interest is the interest which is calculated on both the initial principal and the accumulated interest from previous time periods. In simple terms, you need a reliable compound interest calculator to ensure you are receiving the right ROI (Rate of Interest).
How to Calculate Compound Interest?
- Simple Interest: Calculated only on the original amount.
- Compound Interest: Grows faster because the interest keeps getting added to the principal, and future interest is calculated on the new total amount.
Compound Interest Formula:
A = P(1 + r/n)nt
- A = Final amount (including interest)
- P = Principal (initial investment or loan)
- r = Annual interest rate (in decimal, e.g., 5% → 0.05)
- n = Number of times interest is compounded per year
- t = Time in years
Example:
Invested amount Rs. 1,000 at an annual interest rate of 5%. Calculate compounded interest for 3 years (compounded annually).
A = 1000 × (1 + 0.05)3 = 1000 × (1.05)3 ≈ 1157.63
Total interest = 157.63
FAQ
What is compound interest in simple words?
Compound interest is earning of “interest on interest”. Instead of just earning interest on your original money that is (Principal Amount), you also start earning interest on the interest.
Compound interest is widely used in:
- Savings accounts
- Fixed deposits
- Retirement funds
- Loans and mortgages