A Compound Interest Calculator is your personal growth planner for money. It shows how small investments today can lead to big returns tomorrow through compound interest. You need to simply enter your investment amount and time period and watch your money multiply over time. A compound interest calculator is the perfect tool to see how your savings can work harder for you!
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Investment Plans
Generate wealthEarn 1 Cr# in maturity with Zero LTCG tax¶
Double tax savings^On premiums (under 80C) and on maturity (under
10(10D))
A Compound Interest Calculator is a simple tool that helps you easily calculate the interest earned on an initial amount of money (called the principal) over time. It takes into account the interest earned not just on the principal but also on the accumulated interest from previous periods. This means your money grows faster, as interest is calculated on a growing balance.
The cumulative interest calculator shows how much your investment will grow over time by entering details like the principal amount, interest rate, time period, and compounding frequency. It saves your time and ensures accuracy in planning your finances in the best investment options.Â
How to Use a Compound Interest Calculator?
Follow the steps mentioned below to use the compound interest calculator in a better way:Â
Step 1- Enter the Principal Amount: Start by inserting the initial amount of money you plan to invest or save. You can choose your investment frequency from the following-
Invest One-Time
Invest Monthly
Invest Yearly
Step 2- Select the Investment Years: Insert the duration for which you want to keep investing in the selected investment plan.
Step 3- Enter the Years to Stay Invested: You also need to select the number of years you want to keep your money invested, after which you will get the maturity amount.
Step 4- Choose the Interest Rate: Enter the annual interest rate at which your money will grow.
RESULT: The Cumulative Interest Calculator will automatically compute compound interest and display the following details:
Total Invested Amount
Total Maturity Amount
Uses of Compound Interest Calculator Online
The key uses of a compound interest calculator are as follows:
Easily calculates compound interest on your investments in just a few clicks.
Helps you understand how your money grows over time with interest.
Allows you to compare different interest rates and investment durations.
Saves time by quickly providing accurate results without manual calculations.
Enables you to plan better for your financial goals with clear projections.
Offers a convenient and user-friendly way to track potential returns.
Compound Interest Formula (CI Interest Formula)
The Policybazaar cumulative interest calculator uses an internationally standardized formula to compute Compound Interest (CI):Â
The Compound Interest works on the basis of the following formula:
A = P (1 + r/n) ^ nT Compound Interest (CI) = A - P
Terms used in Compound Interest
A
stands for Total Compounded Amount
P
stands for Principal Amount
r
stands for Rate of Interest
n
stands for Number of Time Interest is Compounded Per Year
T
stands for Number of Years
Illustration to Use Accumulated Interest Formula:
If you invest â‚ą10,000 with an annual interest rate of 10%, and you want to keep this amount invested for the next 10 years, to compute compound interest, the calculation will be:Â
P= â‚ą10,000
r= 10% = 0.01
n= 1 (as interest is compounded annually)
T= 10 years
A= 10,000 (1 + 0.01) ^ 10 = â‚ą25,937
RESULT: Total Maturity Amount = â‚ą25,937
Advantages of Policybazaar Compound Interest Calculator
The Policybazaar Compound Interest Calculator offers several advantages for users:
Easy to Use: The Policybazaar compound interest calculator is simple to operate, helping you quickly figure out your returns.
Accurate Results: It provides precise estimates, allowing you to plan your investments confidently.
Time-Saving: With just a few inputs, you get instant results, saving time on complex calculations.
Customizable: You can adjust the variables to fit your investment plans, which offers flexibility to explore different scenarios.
Free Tool: It is available to use at no cost, making it accessible to everyone.
Better Financial Planning: Helps you understand potential growth, making your financial decisions smarter and more informed.
What is Monthly, Quarterly, and Yearly Compounding Frequency for Compound Interest Calculator in India?Â
In a Compound Interest Calculator in India, the compounding frequency refers to how often the interest is calculated and added to the principal. Learn about the compounding frequencies below:
Monthly Compounding:
Interest is calculated and added to the principal 12 times a year.
Every month, the interest earned is added to the principal, and the next month's interest is calculated on this new balance.
Quarterly Compounding:
Interest is compounded 4 times a year, every three months.
The interest earned each quarter is added to the principal, and the next quarter’s interest is calculated on the new balance.
Yearly Compounding:
Interest is compounded once a year.
At the end of the year, the interest is added to the principal, and the following year’s interest is calculated on the updated balance.
The following table shows the different investment options in India along with their compounding frequencies as of 2024:
Investment Option
Compounding Frequency
Fixed Deposits (FDs)
Annually, Quarterly (in some cases)
Recurring Deposits (RDs)
Quarterly
Public Provident Fund (PPF)
Annually
National Savings Certificate (NSC)
Annually
Senior Citizen Savings Scheme (SCSS)
Quarterly
strong>Post Office Monthly Income Scheme (POMIS)
Monthly
Mutual Funds (Equity/ Debt)
Daily (NAV updated, compounding via reinvestment)
Unit Linked Insurance Plans (ULIPs)
Daily (NAV-based compounding)
National Pension System (NPS)
Daily (NAV-based compounding)
Employee Provident Fund (EPF)
Annual
Sukanya Samriddhi Yojana (SSY)
Annual
Corporate Bonds
Semi-annual, Quarterly (varies)
These compounding frequencies affect how quickly your investment grows—the more frequent the compounding, the faster the growth.
Wrapping It Up
A compound interest calculator is a simple and effective tool to help you estimate the compound interest so that you can see how your investments grow over time. By inserting your initial amount, interest rate, and time period, you can easily visualize the power of compound interest. It is a great way to plan your savings and make informed financial decisions for the future.
Frequently Asked Questions
Is it possible to compute my returns on a National Savings Certificate?
Yes, it is. You can easily compute your returns on NSC using the compound interest calculator online.
How to calculate compound interest?
The formulation for computing the yearly compound interest is: Compound Interest = P (1 + r/n) ^ nt
P denotes principal amount
T is time in years
r is the rate of interest
n denotes compounding frequency
What is the effective interest rate annually?
The effective yearly rate is the interest rate that you get on your savings after the inclusion of compounding. At the time of compounding interest, the effective yearly rate becomes higher than the nominal yearly annual rate. The more the interest is compounded within a year, the more the effective annual interest rate will be.
What is the 8 4 3 rule of compounding?
The 8-4-3 rule refers to the idea that an investment earning 8% annually will roughly double in 9 years, quadruple in 18 years, and grow 8 times in 27 years, thanks to compound interest.
What is the compound interest on 1 lakh for 5 years?
The compound interest depends on the rate and frequency of compounding. For example, at a 10% annual rate compounded annually, the interest on â‚ą1 lakh for 5 years would be around â‚ą61,051.
What is the compound interest rate?
A compound interest rate is the rate at which interest is calculated on both the initial principal and the accumulated interest from previous periods.
How to earn compound interest daily?
To earn compound interest daily, invest in accounts that offer daily compounding, like certain high-yield Unit Linked Insurance Plans (ULIP), mutual funds, or stock trading.
What is the rule for compound interest?
The key rule is that compound interest grows exponentially over time as interest is earned on both the initial principal and previously earned interest.
What is compound interest in FD?
In a Fixed Deposit (FD), compound interest means that the interest earned on your deposit is added to the principal at regular intervals, and future interest is calculated on the new total.
What are compound interest examples?
An example of compound interest is a â‚ą10,000 investment at a 10% annual rate compounded annually. After 10 years, the total would grow to â‚ą25,937 due to compounding, which includes the compound interest of â‚ą15,937.
Is compound interest good or bad?
Compound interest is good for investments and savings, as it helps money grow faster. However, it can be bad in loans, as debt can grow quickly if not managed properly.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
Past 10 Years' annualised returns as on 01-11-2024
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
*All savings are provided by the insurer as per the IRDAI approved insurance plan.
Tax benefit is subject to changes in tax laws. Standard T&C Apply
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ
^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.
#The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CARG 8%; ₹50,45,591 @ CAGR 4%
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
**Returns are based on past 10 years’ fund performance data (Fund Data Source: Value Research).
Generate wealth Earn 1 Cr# in maturity with Zero LTCG tax¶
Double tax savings^ On premiums (under 80C) and on maturity (under 10(10D))
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