Everyone has long-term and short-term financial goals. The growth of your money depends on the returns generated on your investments. This is where the power of compounding comes into the picture.
Compounding grows your money manifold. In simple terms, compounding is the compound interest that increases the value of your investment by reinvesting the interest/returns along with the principal amount. The key factor is the reinvestment of your dividends
or interest income earned on your principal investment amount.
With compounding, the ROI (Return on Investment) increases with an increase in the principal amount. The ROI rises further with increasing compounding frequency - monthly, quarterly, half-yearly, or yearly. For example, let us assume that you invest ₹1,00,000
with average annual returns of 15% per annum compounded quarterly. Then, three years later, the value of your investment at redemption will be ₹1,55,545.
Thus, the power of compounding helps to multiply your wealth at a faster rate. To find out the level of compounding, you can use the power of the compounding calculator.
Compound Interest Calculator
Once you input the requisite values, the compound interest calculator computes your results within seconds. Thus, a compounding calculator is a fast and time-saving tool, as you no longer need to carry out cumbersome manual calculations.
In a nutshell, a compound interest calculator computes the value of your investments after a set number of periodic investments or a single lump sum investment for a stipulated time frame at a given rate of return. A compounding calculator is an indispensable
tool for investment planning.