Compound Interest Calculator
Calculate your compound interest.
What is Compound Interest?
Compound Interest is the interest you will receive on a loan or deposit, taking into account the initial amount and the previous interest accumulated over time. It can be seen as the interest you earn on interest, and thus, contributes to a faster increase rate on the principal amount.
For example, if you add Rs. 10,000 in your account on a 1 percent annual interest, you will earn Rs. 100 in interest after a year, taking the total to Rs. 10,100. In the successive year, due to compound interest, you will earn 1 percent on Rs. 10,100 and not the principal amount of Rs. 10,000, making the total Rs. 10,201, which means CI is Rs. 101.
What is a Compound Interest calculator?
A Compound Interest calculator is used to calculate the projection for compound growth for your savings account or investment for different periods of time, based upon a certain rate of interest.
How does a Compound Interest calculator work?
The Compound Interest calculator uses three metrics, the principal amount, interest rate and the time period of money invested, and the Compound Interest formula, to calculate the Compound Interest.
What is the formula of Compound Interest?
The following formula is used to calculate Compound Interest:
A = P (1 + r/n) ^ nt
Where, CI = A – P
Where:
CI = Compound Interest
A = Total amount received after a certain numbers of years
P = Principal Amount/Present Amount
r = Rate of Interest (percentage) / 100
N/n = Number of times interest compounds in a year (daily, monthly, yearly, etc)
T/t = Number of years
How do we calculate Compound Interest?
To calculate Compound Interest, you must know the three parameters required to compute it. These include the Principle Amount you’ve borrowed or mean to borrow, Let’s say Rs. 10,000. The number of years you will pay back the loan in, let’s say 10 years. The rate of interest is the extra interest you will have to pay on the loan, let’s say 10%. Also check how many times in the year is the interest compounded. For this example, let’s say annually, i.e., 1 time a year.
Now use the CI calculator or use the Compound Interest formula to compute the total compound Interest you are liable to pay.
A = P (1 + r/n) ^ nt
A = 10,000 (1 + 0.1) ^ (1)(10)
Total Amount is Rs. 25,937.42
Where, P is Rs. 10,000, making CI Rs. 15,937.42
You can calculate the Compound Interest by simply using the Upstox Compound Interest calculator.
What are some examples of Compound Interest?
Compound Interest can be calculated using the Compound Interest formula:
A = P (1 + r/n) ^ nt – P
CI = A – P
Where:
CI = Compound Interest
A = Total Amount accrued
P = Principal Amount/Present Amount
R/r = Rate of Interest
N/n = Number of times interest compounds in a year
T/t = Number of years
For example, you invested Rs. 5,000 in a fixed deposit that compounds interest quarterly with a 10% per annum rate of return. The amount invested remains in the fixed deposit for 5 years. Therefore, the values of the variables will be:
P = 5,000
r = 10/100 = 0.1
N/n = 4
T/t = 5
Now, putting the values in the formula:
A = 5000 (1 + 0.1/4) ^ 4×5
A = 8193.08
CI = A – P
CI = 8193.08 – 5000
So, in 5 years, your Compound Interest is Rs. 3193.08.
Here is another example for calculating Compound Interest. Imagine you have put Rs. 10,000 in your savings account for 10 years, earning 5% interest per year. Our compounding in this case is yearly. Therefore, the values of the variables will be:
P = 10,000
R/r = 0.05
N/n = 1
T/t = 10
Now, putting the values in the formula:
A = 10000 (1 + 0.05/1) ^ 1×10
A = 16,288.946
CI = A – P
CI = 16288.946 – 10000
So, in 10 years, you will receive a total Compound Interest of Rs. 6,288.946.
What are the benefits of using a Compound Interest calculator online?
Calculating the Compound Rate can be extremely difficult and tedious. Manual calculation is also prone to mistakes. On the other hand, using a Compound Interest calculator is easy, reliable, accurate and fast.
How is Upstox the best online Compound Interest calculator?
Being a top player of the finance world, Upstox is committed to providing a seamless experience when it comes to your finances. Our online Compound Interest calculator is built with the best user interface, making it easy to use, speedy & comfortable. The online CI calculator is designed to help you align your financial goals & current investments.
Frequently Asked Questions
How to use the Compound Interest calculator?
The Compound Interest calculator uses three metrics, the principal amount, interest rate and the time period of money invested, and a mathematical formula, to calculate the Compound Interest.
To use the Compound Interest calculator, you must know these aforementioned three metrics and fill in the correct information in their respective places. The calculator will automatically put in the formula and calculate the Compound Interest for you.
How do you calculate Compound Interest without formula?
Calculating Compound Interest without the formula is a tedious process, as it would have to be calculated as many times as it is compounded for every year & then totaled.
For example, let’s say Ankit has Rs. 10,000 in his saving account & he earns 5% interest on it compounded annually, he would simply have to calculate the interest earned every year.
Year 1: 5% of 10,000 = Rs. 500
Year 2: 5% of 10,500 = Rs. 525
Year 3: 5% of 11,025 = Rs. 551.25
And so on. So CI earned in 3 years is Rs. 1,576.25
What are the three steps of calculating Compound Interest?
Using the Compound Interest calculator, you can find the Compound Interest in three steps:
Identify the three metrics used for calculation; the principal amount, interest rate and the time period of money invested.
Insert the values of the metrics in their respective places in the calculator.
Press submit/calculate and the calculator will give you the answer within seconds!
Using the Compound Interest calculation formula, you can calculate the Compound Interest with the following steps:
A = P (1 + r/n) ^ nt
CI = A – P
Solve the equation within the brackets.
The number within the bracket is then solved with the exponential number (nt).
This number is multiplied with the principal amount to receive the total amount accrued. The CI is the difference between total amount & principal amount.
How do you calculate Compound Interest monthly?
Compound Interest can be calculated monthly using the same Compound Interest formula:
A = P (1 + r/n) ^ nt – P
CI = A – P
Where:
CI = Compound Interest
A = Total amount accrued
P = Principal Amount/Present Amount
R/r = Rate of Interest
N/n = Number of times interest compounds in a year
T/t = Number of years
However, while calculating monthly, the variable N/n will be 12 for the number of months, hereby making it number of times interest compounds in a year.
For example, you invested Rs. 5,000 in a fixed deposit that compounds interest monthly with a 10% rate of return. The amount invested remains in the fixed deposit for 1 year. Therefore, the values of the variables will be:
P = 5,000
R/r = 0.1
N/n = 12
T/t = 1
Now, putting the values in the formula:
A = 5000 (1 + 0.1/12) ^ 12×1
A = 5523.565
CI = 5523.565 – 5000
CI = 523.565
How can a CI calculator help you?
Calculating the Compound Rate can be extremely difficult and tedious, and is prone to error. On the other hand, using a Compound Interest calculator is easy, reliable, accurate and fast.
What are some examples of Compound Interest?
Compound Interest can be calculated using the Compound Interest formula:
CI = P (1 + r/n) ^ nt – P
Where:
CI = Compound Interest
P = Principal Amount/Present Amount
R/r = Rate of Interest
N/n = Number of times interest compounds in a year
T/t = Number of years
For example, you invested Rs. 5,000 in a fixed deposit that compounds interest quarterly with a 10% per annum rate of return. The amount invested remains in the fixed deposit for 5 years. Therefore, the values of the variables will be:
P = 5,000
R/r = 0.1
N/n = 4
T/t = 5
Now, putting the values in the formula:
CI = 5000 (1 + 0.1/4) ^ 4×5 – 5000
CI = 3,193.08
So, in 5 years, you will have a total of Rs. 8,193.08.
Here is another example for calculating Compound Interest. Imagine you have put Rs. 10,000 in your savings account for 10 years, earning 5% interest per year. Our compounding in this case is yearly. Therefore, the values of the variables will be:
P = 10,000
R/r = 0.05
N/n = 1
T/t = 10
Now, putting the values in the formula:
CI = 10000 (1 + 0.05/1) ^ 1×10 – 10000
CI = 6,288.946
So, in 10 years, you will have a total of Rs. 16,288.946.
How is Upstox the best online Compound Interest calculator?
Being a top player of the finance world, Upstox is committed to providing a seamless experience when it comes to your finances. Our online Compound Interest calculator is built with the best user interface, making it easy to use, speedy & comfortable. The online CI calculator is designed to help you align your financial goals & current investments.
What is the formula of Compound Interest annually?
Compound Interest can be calculated annually using the same Compound Interest formula:
A = P (1 + r/n) ^ nt – P
CI = A – P
Where:
CI = Compound Interest
A = Total amount accrued
P = Principal Amount/Present Amount
R/r = Rate of Interest
N/n = Number of times interest compounds in a year
T/t = Number of years
However, while calculating annually, the variable N/n will be 1, hereby making it number of times interest compounds in a year.
For example, you invested Rs. 5,000 in a fixed deposit that compounds interest monthly with a 10% rate of return. The amount invested remains in the fixed deposit for 1 year. Therefore, the values of the variables will be:
P = 5,000
R/r = 0.1
N/n = 1
T/t = 1
Now, putting the values in the formula:
A = 5000 (1 + 0.1/1) ^ 1×1
A = 5500
CI = 5500 – 5000
CI = 500
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Disclaimer:
This calculator is meant to be used for indicative purposes only. It is designed to assist you in determining the appropriate amount of prospective investments. This calculator alone is not sufficient and shouldn’t be used for the development or implementation of any investment strategy. Upstox does not take the responsibility/liability nor does it undertake the authenticity of the figures calculated therein. Upstox makes no warranty about the accuracy of the calculators/reckoners. The examples do not claim to represent the performance of any security or investments. In view of the individual nature of tax consequences, each investor is advised to consult his/her own professional tax advisor before making any investment decisions on the basis of the results provided through the use of this calculator.