An Introduction of Compound Interest Calculator

by Pankhudi Dave Head Finance Manager

Like any other adult, all of us want to multiply our money; we want to get a better result in all our investments. Therefore, we look for options or avenues that give us better yield, like fixed deposits, shares, property investment, buying GOI or gold and many such things.

However, what indicates that our money is doubled or tripled or that we have a good return? Interest on the principal amount determines this. Interest is the annual percentage figure which depicts the percentage growth on your invested amount.

Though there are two kinds of interests available, one is compound interest, and the other is simple interest. For any fixed deposit, you start in your bank the first year your principal will have simple interest calculated on it, and from the second year, interest is computed compound interest-wise.

Technically compound interest gives better yield, the principal amount grows more through it, but the calculation of compound interest (CI) is tricky. Therefore people resort to using a compound interest calculator.

What is a compound interest calculator?

Most websites provide the service of online compound interest calculation, wherein you only have to specify essential things like your principal amount, rate of interest, maturity period, number of rest years. The website will then immediately calculate it and would display the final amount on maturity.

Here is the formula, to calculate the compound interest manually-

C = P x (1+r)^n
•    C = Compounded value of the amount
•    P = Initial amount
•    R = Interest rate

• N = Length or time of investment

CAGR- Compound Annual Growth Rate

Now, that you know what is compound interest and how can you calculate it manually as well as online. Next thing you need to know is the compound annual growth rate calculator which calculates the overall yearly growth of your principal amount.
Like the compound interest calculator, many websites provide such services like angel broking, but you can also calculate it manually through this formula.

CAGR(t0, tn) = [V(tn)/V(t0)]1/tn-to – 1

•    V(t0) = Original value
•    V(tn) = End value
•    tn-t0 = Number of years

The compound growth calculator upon calculation gives you the actual growth rate of your invested money, making it easier for you to pick the right investment for you and if in case you are currently engaged with a low yield investment you can immediately halt it.

Final Word

Compound interest calculator India had become popular just recently, before that we all used to calculate our principal's growth rate and final maturity amount manually, but with the inflow of technology and the internet, you can calculate compound interest in seconds. It's a great way to know in-depth about the overall returns on your interest and the annual growth rate of your money.

The formula we have provided you will make it easier to check the maturity amount as well, now you don't need a CA to do this for you, you can save a lot of money as well through these calculators.