What is Compound Interest?

Compound Interest is the interest calculated on both the original principal and the accumulated interest from previous periods. Unlike simple interest, it helps your investment grow faster because interest is earned on interest over time.

Compound interest is commonly used in Fixed Deposits (FD), Mutual Funds, PPF, SIP investments, retirement planning and other long-term investments.

Compound Interest Formula

• A = Final Amount
• P = Principal Amount
• r = Annual Interest Rate
• n = Compounding Frequency
• t = Investment Period (Years)

Benefits of Compound Interest

• Earn interest on both principal and accumulated interest.
• Build long-term wealth faster.
• Perfect for retirement planning.
• Useful for FD, RD, Mutual Funds and PPF.
• Shows the power of long-term investing.

Example Calculation

Frequently Asked Questions