What is Compound Interest?
Compound interest is the interest calculated on the initial principal and also on the accumulated interest of previous periods. Unlike simple interest, compound interest allows your investment to grow exponentially over time, making it a powerful tool for wealth creation.
How to Use This Compound Interest Calculator
Our free online compound interest calculator helps you estimate:
- How much your investments will grow over time
- The power of compounding on your savings
- Comparison between different compounding frequencies
- Projected returns on fixed deposits (FD), recurring deposits (RD), or SIP investments
Why Compound Interest Matters for Investors
Understanding compound interest is crucial for:
- Retirement planning: Small regular investments can grow significantly over decades
- Education fund: Start early to benefit from compounding
- Wealth creation: The longer you stay invested, the more you benefit
Compound Interest Formula
The mathematical formula for compound interest is:
A = P × (1 + r/n)nt
Where:
- A = Maturity amount
- P = Principal amount
- r = Annual interest rate (in decimal)
- n = Number of compounding periods per year
- t = Time in years