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Calculate the simple or compound interest accrued on a given sum of money

This calculator helps you calculate the simple or compound interest on an invested sum of money.

How to use this calculator

  1. Enter your investment amount (i.e. how much money have you invested)

  2. Enter the duration of the investment in years

  3. Enter your interest rate

  4. Select whether the interest is simple of compounded

What is simple and compound interest?

Simple interest: Simple interest is the money (interest) earned (or charged) that is calculated on an initial principal amount over a pre-determined period of time. As it is calculated on the initial principal amount, the absolute amount of interest is constant over time.

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Compound interest: Compound interest is money (interest) that is earned (or charged) that is calculated on the initial principal amount as well as the money accumulated over time. It is commonly also known as interest on interest. Due to compounding effects, the difference in interest between two periods increases over time. Compound interest can be calculated for various periods, e.g. daily, weekly, monthly, quarterly, yearly etc

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How is simple and compound interest estimated?

The formulas for simple and compound interest are mentioned above. The main difference between the formulas lies in the exponential term.​

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What is an example of simple and compound interest?

Assuming a principal of ₹100,000 and an annual interest rate of 12%, we can calculate the interest earned for both simple and compound interest for different durations as follows:

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Simple interest

As the simple interest is calculated only on a fixed initial principal, it will remain constant at ₹12,000 per year. For the following durations, the total interest accrued is as follows:

  1. 5 years: ₹60,000

  2. 10 years: ₹1,20,000

  3. 20 years: ₹2,40,000

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Compound interest

As compound interest is calculated on the initial principal as well as accumulated interest payments, it is not constant per year. For the following durations, the total interest accrued is as follows:

  1. 5 years: ₹76,234.17

  2. 10 years: ₹2,10,584.82

  3. 20 years: ₹8,64,629.31

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Why is this simple and compound interest calculator useful?

This simple and compound interest calculator is useful as it can help with understanding compounding as well as the returns from different investment instruments better which could then help with retirement planning or investment planning.

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How do I use this simple and compound interest calculator?

Instructions to use this simple and compound interest calculator are provided above.

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