Compound Interest Calculator In India With Graph

Compound Interest Formula:

\[ A = P \times \left(1 + \frac{R}{100 \times n}\right)^{n \times T} \]

Principal (P):

₹

Annual Interest Rate (R):

Time (T):

years

Compounding Frequency (n):

Final Amount (A):

Total Interest Earned:

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is Compound Interest?

Compound interest is the interest calculated on the initial principal and also on the accumulated interest of previous periods. It's a powerful concept in finance where your money grows at an accelerating rate over time, making it a key factor in long-term wealth creation.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

\[ A = P \times \left(1 + \frac{R}{100 \times n}\right)^{n \times T} \]

Where:

\( A \) — Final amount (₹)
\( P \) — Principal amount (₹)
\( R \) — Annual interest rate (%)
\( n \) — Compounding frequency per year
\( T \) — Time in years

Explanation: The formula calculates how much your investment will grow based on the principal amount, interest rate, compounding frequency, and time period.

3. Importance of Compound Interest in India

Details: Compound interest is fundamental to various Indian financial products including fixed deposits, recurring deposits, mutual funds, and retirement planning. Understanding compound interest helps investors make informed decisions about their savings and investments.

4. Using the Calculator

Tips: Enter principal amount in Indian rupees, annual interest rate in percentage, time in years, and select the compounding frequency. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between simple and compound interest?
A: Simple interest is calculated only on the principal amount, while compound interest is calculated on both the principal and accumulated interest, leading to faster growth.

Q2: How does compounding frequency affect returns?
A: More frequent compounding (monthly vs annually) results in higher returns because interest is calculated and added to the principal more often.

Q3: Are there tax implications on compound interest in India?
A: Yes, interest earned from most investments is taxable under the Income Tax Act, 1961. TDS may apply to certain instruments like fixed deposits.

Q4: What are typical compounding frequencies in Indian financial products?
A: Common frequencies include quarterly (for most FDs), monthly (for RD accounts), and daily (for some savings accounts and mutual funds).

Q5: How can I maximize compound interest benefits?
A: Start investing early, choose instruments with higher compounding frequencies, reinvest your earnings, and maintain investments for longer periods.