Benefits of Compound Interest

What is Compound Interest?

Compound interest is often referred to as “interest on interest.” It’s the interest earned on both the initial principal amount you invest and the accumulated interest from previous periods. Over time, compound interest can significantly grow your investment....

How is Compound Interest Calculated?

Compound interest is calculated using the compound interest formula: A = P(1+r/n)^nt. To calculate the compound interest for annual compounding, you need to multiply the initial balance by one plus your annual interest rate raised to the power of the number of time periods (years). This will give you a combined figure for the principal and the compound interest....

How to Use Compound Interest Calculator?

Initial Investment: Enter the initial amount of money you are investing. Interest Rate: Enter the annual interest rate offered on your investment. Convert the percentage rate into a decimal (e.g., 5% = 0.05). Number of Years: Enter the total number of years you plan to keep your investment. Compounding Frequency: Select how often the interest is compounded (e.g., annually, monthly, quarterly). Calculate: Click the “Calculate” button....

Calculate Compound Interest Example

Example 1: Suppose you invest ₹50,000 in a fixed deposit account with an annual interest rate of 6%, compounded annually, for a period of 3 years....

How to Calculate Monthly Compound Interest?

Here’s how to calculate monthly compound interest using our compound interest formula. Monthly compound interest means that our interest is compounded 12 times per year:...

Benefits of Compound Interest

I believe that pictures can be very helpful in aiding our understanding of complex concepts. The power of compound interest is no exception. It becomes much easier to comprehend when you look at a graph of long-term growth....

Compounding with Additional Deposits

Combining the power of interest compounding with regular deposits into your savings account, SIP, Roth IRA or 401(k) is an efficient saving strategy that can significantly boost the growth of your money in the long run. For example, if you add an extra Rs. 100 per month into your investment, after 20 years, your balance can reach up to Rs. 67,121, with interest of Rs. 33,121 on total deposits of Rs. 34,000....