Calculate both simple and compound interest on your investments or loans. Compare different interest rates, compounding frequencies, and visualize your investment growth over time.
Interest is the cost of borrowing money or the reward for saving it. It is typically expressed as a percentage of the principal (the original amount of money) over a specific period, usually a year.
Simple interest is calculated only on the initial principal. It does not take into account the interest accumulated over previous periods. This means the interest payment remains the same throughout the term of the loan or investment.
The formula for simple interest is: SI = P × R × T / 100, where P is the principal amount, R is the rate of interest per annum, and T is the time period in years.
Compound interest is calculated on both the initial principal and the accumulated interest from previous periods. This means your money grows faster as you earn "interest on interest."
The formula for compound interest is: A = P(1 + r/n)^(nt), where A is the final amount, P is the principal amount, r is the annual interest rate (in decimal form), n is the number of times interest is compounded per year, and t is the time period in years.
Compound interest is often referred to as the "eighth wonder of the world" because of its ability to generate wealth over time. The longer your money is invested, the more powerful the compounding effect becomes.
For example, if you invest ₹10,000 at 8% annual interest compounded yearly for 30 years, you would have approximately ₹1,00,627 at the end of the term. That's more than 10 times your initial investment!
The frequency of compounding can significantly impact your returns. The more frequently interest is compounded, the more you earn. Common compounding frequencies include yearly, half-yearly, quarterly, monthly, and daily.
For example, ₹10,000 invested at 8% for 10 years would grow to:
Disclaimer: The results provided by this calculator are for informational purposes only and do not constitute financial advice. Please consult a certified financial advisor before making any investment decisions.
