A Beginner's Guide to Compound Interest Calculators

 Compound interest is a bit different from usual interest. It increases wealth by helping you earn interest on interest. Additionally, a compound interest calculator is a tool that helps to calculate the compounded value of an investment over time. Most companies work on the principle of compounding wealth. With advancements in technology, these interests can be easily calculated through compound interest calculators. These calculators help to calculate the compound interest for varied periods like monthly, quarterly, half-yearly, etc. The main benefit offered by the calculator is it tells you what wealth you’ll be able to create over time. This article talks about compound interest calculators benefits and how to use them.

Benefits of Compound Interest Calculators

There are various benefits of compound interest calculators which make them a considerable option over traditional methods of calculating. Below mentioned are the benefits: .


Accurate Results - Compound interest calculators help you get accurate results about the percentage of returns over a period. 


Calculate Returns - The calculator also helps to calculate the amount of investment one needs over some time. One can create the final investment based on returns and compounding assumptions. 


Easy Interface - The calculators have easy interfaces, which helps to get results quickly. One needs to enter details like the principal amount, rate of interest, period of investment, frequency of compounding, etc. 

How to Use the Compound Interest Rate Calculators?

The compound interest rate calculator allows you to calculate compound interest on an investment. This compound interest is calculated based on a formula. The device needs certain inputs to be put into it to apply the formula which is mentioned below. 


A = P ( 1 + r/n)^nt


A is the total amount of wealth that one accumulates including interest.

P is the original investment or the principal amount. 

R is the rate of interest or the return payable on investment

N is the number of times the interest compounds, which could be half-yearly, quarterly, etc.

T, this is the total tenure for which one does their investment.


Compound Interest Example

If one invests an amount of Rs.100000 with a compound interest of 8%, he would earn an interest of 8000 in the 1st year. 


In the second year, one would earn interest on the interest which would be (Rs.100000 + 8000) * 8%.


In the third year, the person would earn (Rs.108000)*8%*8%, and so on.

Conclusion

A compound interest calculator is a device that lets one calculate the compound interest on one’s investment. The calculator offers various benefits like accurate results, an easy interface, calculated returns, clear breakdown of interest etc. These calculators are easily available on sites like Tata Capital Moneyfy which offers these calculators with an easy user interface. Apart from the benefits one should also know how to use these calculators. They need some inputs like principal, rate of interest, number of years or months, etc. 

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