Compound Interest – Free Online Utility
Calculate total returns powered by compound interest.
₹
%
Years
Principal
₹10,000
Interest Earned
+₹6,288.95
Total Amount
₹16,288.95
What is Compound Interest?
Compound interest is the interest calculated on the initial principal, which also includes all of the accumulated interest of previous periods of a deposit or loan. It differs from simple interest, where interest is calculated solely on the principal amount.
The Impact of Compounding Frequency
The frequency of compounding refers to how often the accumulated interest is added back into the principal to generate more interest. The more frequently interest is compounded, the higher the total amount generated. For instance, an investment compounded monthly will yield a higher return than one compounded annually, given the same interest rate and time period.
Frequently Asked Questions
Compound interest is the addition of interest to the principal sum of a loan or deposit. In simple terms, it is interest on interest. It is the result of reinvesting interest, rather than paying it out.
Simple interest is based on the principal amount of a loan or deposit. In contrast, compound interest is based on the principal amount and the interest that accumulates on it in every period.
The compounding frequency is the number of times per year the accumulated interest is paid out, or capitalized, on a regular basis. Common frequencies include annually, semi-annually, quarterly, monthly, and daily. A higher frequency leads to higher total returns.
Related Free Tools
- SIP Calculator — Calculate expected returns on your mutual fund SIPs.
- Savings Goal — Plan your savings to reach a specific financial goal.