Compound Interest Calculator

Mastering Compound Interest: Complete Guide in India

Compound interest is a powerful tool for growing savings over time. This guide covers essential concepts, calculations, and strategies to maximize returns through compound interest.

Understanding Compound Interest

Compound interest grows your money exponentially over time. The formula to calculate the future value of an investment or savings account.

Where:

• P is the monthly deposit amount.
• r is the annual interest rate (decimal).
• n is the number of times interest is compounded per year.
• t is the tenure in years.

The calculation for the maturity amount in an RD involves summing up the interest for each monthly installment. This can be simplified using the formula for the maturity amount:

Where:

• P is the monthly deposit amount.
• r is the annual interest rate (decimal).
• n is the number of times interest is compounded per year (typically monthly).
• t is the tenure in years.

For instance, let's calculate the maturity amount for a recurring deposit where ₹10,000 is deposited monthly with an annual interest rate of 6% compounded quarterly for 3 years:

Conclusion

Recurring deposits are a disciplined way to save regularly and earn assured returns. By understanding the interest calculation, benefits, and strategies for maximizing returns, you can make informed decisions about your recurring deposit investments. Always compare interest rates and terms across different banks to find the best RD scheme that aligns with your financial goals.