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Here’s Why You Need a Compound Interest Calculator Online

Here’s Why You Need a Compound Interest Calculator Online

The power of compounding can help your money grow exponentially. Down to its basics, compounding interest works by reinvesting your investments into the same scheme; thereby, giving you returns based on interest gained on the principal amount, and on interests accrued. It’s like earning an interest on interest, and in doing so, your investments grow at a much faster compared to traditional investment options.

The best way to calculate compound interest on investments is to use a compound interest calculator. It cuts short the tedious manual process of having to calculate interest rates across tens of different plans in the market, such as in the case of mutual funds, giving the investor the freedom to choose a scheme that best matches your future financial goals.

Image Source: Shutterstock
Image Source: Shutterstock

What is Compound Interest Calculator?

A compound interest calculator is an online tool that automates the process of compound interest calculations across various investment instruments. It gives you estimated results based on your investment amount, duration, and gives you a figure as to how much you can expect to make from your investments over the duration of your investment. Since calculating compound interest across plans is a very complex process involving accurate calculations, there can be no room for errors. A compound interest calculator gives you error free estimated results across tens of hundreds of plans available in the market to an investor.

Now that we have covered the basics of compounding interest and you have an understanding of compounding interest formula calculator, it’s time to look at a few of the biggest benefits of using a compound interest calculator.

Reliable Results

Online compound interest calculators give you reliable results in terms of expected investment returns that are aligned with the financial goals of the future. This lets you make informed choices when selecting investment instruments so that you only invest in plans that are the best match for your needs.

Customized Options

Online compound interest calculators sometimes give you the option to customize them to show results via assigning investments that are based on your needs and requirements. This is helpful compared to getting generic results since every person’s financial needs might be different than the other.

Calculate Total Returns

By giving you a clear picture of how much you need to invest regularly in the instrument of your choice, a compound interest calculator helps you maximize the power of compounding.

Better Financial Planning

Proper financial planning is key to getting the results you want. An online compound interest formula calculator helps you understand your investment needs to build a corpus that can aid you in achieving the desired financial goals of the future. Moreover, it also helps you compare the returns from the best investment options in India.

Create a Diversified Portfolio

The importance of having a diversified portfolio cannot be stressed enough. A compound interest calculator helps you identify investment options that can help you spread your investments through proper planning and research based on fact and logic. In doing so, you would be able to maximize your returns in the longer run, and that too at a much faster pace.

Image Source: Shutterstock
Image Source: Shutterstock

How to Use a Compound Interest Formula Calculator?

Using a compound interest calculator is a simple process that involves a person entering a few basic details for results to show!

Here’s how to use the calculator:

  • Determine the principal amount you wish you invest and then move the slider on the compound interest slider to see the returns you can expect on the principal amount at maturity
  • Choose the payment frequency, monthly/yearly, half-yearly, or quarterly
  • Select the time period for payment
  • Choose the duration of the investment

Using the power of compounding is one of the wisest and smartest ways of getting your investments speed up. Depending on your risk appetite you can choose plans that give you greater returns over a short duration so that you can fulfill your short-term financial ambitions; or you can choose to stay invested for a much longer time to get exceptionally high returns over time.

No matter what you want, you can achieve all of your financial goals using the power of compounding. No other investment works towards making your money work twice as hard as compounding does.

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