Investment Calculator

An investment calculator is an online calculation tool that helps you estimate the growth of your investments over time. Whether you are planning for retirement, saving for a major purchase, or just curious about potential returns, an investment calculator offers valuable insights into your future returns in an easy-to-use format.

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Investment Return Calculator (Power of Compounding)
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Expected rate of return (in %)

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Power of Compounding Principle

The power of compounding is often called "interest on interest." It is a financial principle that shows how a small investment can grow into a large amount of money over time if the interest earned is reinvested instead of being withdrawn.

Illustration of the Power of Compounding

This concept describes compound interest, where you earn interest not only on the initial amount but also on the interest from previous periods.

Here is what happens if you invest Rs. 10,000 at an annual return of 8% and reinvest the interest each year:

First year: You earn 8% on Rs. 10,000, which is Rs. 800. 

  • Your total investment after the first year becomes Rs. 10,800 (original Rs. 10,000 + Rs. 800 in interest).

Second year: You earn 8% on Rs. 10,800, which is Rs. 864. 

  • Your total investment after the second year becomes Rs. 11,664 (previous Rs. 10,800 + Rs. 864 in interest).

With compound interest, your earnings grow exponentially because each year, you earn interest on a larger and larger amount. This reinvestment process continues over time, resulting in increasing gains with each passing year.

What is an Investment Calculator?

An investment calculator is a tool that helps you estimate the future value of your investments based on various factors. It considers things like:

  • Initial investment: The amount of money you put in upfront.

  • Regular contributions: Any additional amount you plan to invest periodically, like monthly deposits.

  • Investment term: The total duration of your investment.

  • Expected rate of return: The interest rate or growth rate you anticipate on your investment.

There are different investment calculators in India for various investment options. Let us learn about these financial planning calculators in the following section.

Different Types of Investment Calculators in India

There are different types of investment calculators available online, each suited for a specific purpose. 

The following table aims to simplify the various types of investment calculators available in India and offers a brief explanation of their utility:

Investment Calculator Description Key Features
SIP Calculator Calculates the expected returns from a Systematic Investment Plan. Estimates future value based on regular investments, rate of return, and investment period.
FD Calculator Estimates the maturity amount from Fixed Deposits. Provides information on interest earned and maturity value based on the deposit amount, tenure, and interest rate.
RD Calculator Predicts the maturity value for Recurring Deposits. Allows you to see how much you would earn with regular deposits over a fixed period, given a specific interest rate.
PPF Calculator Projects the future value of a Public Provident Fund account. Offers insights into expected returns considering annual contributions, tenure, and current interest rates.
EPF Calculator Helps in estimating the Employee Provident Fund balance over time. Shows future balance based on monthly contributions, employer's contribution, and applicable interest rates.
Retirement Calculator Calculates the corpus needed for retirement planning. Considers current savings, expected retirement age, and desired retirement income to project the needed savings.
Loan EMI Calculator Estimates the monthly Equated Monthly Instalments for loans. Provides an easy breakdown of principal and interest, given a loan amount, tenure, and interest rate.
Home Loan Calculator Helps in planning and understanding home loan payments. Offers detailed insights into monthly payments, total interest, and amortization schedule.
Mutual Fund Calculator Calculates potential returns from mutual funds. Shows projected returns based on initial investment, investment duration, and expected growth rates.
NPS Calculator Estimates benefit from the National Pension System. Projects future pension value considering current contributions, expected returns, and annuity options.

How Does An Investment Calculator Work?

An investment calculator can help you estimate how your money will grow over time based on various factors. The following shows the various stages of working of an investment calculator in India:

Stage 1- Input Values: 

You will provide details like:

  • Initial Investment: The starting amount you put in.

  • Regular Contributions (Optional): The amount you plan to add periodically (monthly, yearly, etc.).

  • Investment Length: The total duration of your investment (in years).

  • Expected Rate of Return: The interest rate or growth rate you anticipate (estimated).

Stage 2- Calculation Formula: 

The investment calculator uses a formula, often based on compound interest, to project future growth.

  • Compound interest considers both the initial investment and the interest earned on previous interest payments.

Stage 3- Output: 

The investment return calculator provides an estimate of:

  • Future Value: The total amount you will have at the end, considering initial investment, contributions, and returns.

  • Other Crucial Details: Some investment calculators in India can also solve for other variables. For instance, they might tell you the required return rate to reach a specific future goal.

Why is it Important to Invest?

Investing is important for a few key reasons:

  • Grow Your Wealth: Investing can outpace inflation, while savings accounts often do not, helping you maintain purchasing power.

  • Power of Compounding: When you invest, you earn interest on your initial investment and on any interest you have already made. The longer your money stays invested, the more compounding works to boost your returns.

  • Achieve Your Financial Goals: Investing can support major goals like retirement, education, or buying a home. With consistent investing, compounding helps grow your wealth faster.

  • Earn Passive Income: Investments like dividend stocks and rental properties can generate steady income without additional work.

  • Counter Inflation: Investing can help ensure your money grows faster than inflation, protecting your buying power.

However, investing involves risks, and losses are possible. Understanding your risk tolerance and choosing suitable investments can help you minimize risk and reach your financial goals.

Benefits of Investment Calculator

Investment calculators are helpful for:

  • Estimating Growth: Calculating how much an investment will grow over a specified period.

  • Comparing Scenarios: Assessing different investment strategies, such as varying the contribution amount or rate of return.

  • Understanding Compounding: Illustrating how compound interest affects the value of an investment over time.

  • Planning for the Future: Determining how much you need to invest to reach a financial goal, like retirement or education costs.

In Conclusion

An investment calculator is a valuable tool to estimate the potential growth of your investments over a period. By entering key information like initial investment, expected return rate, and investment duration, you can gain insights into how your money could grow. It helps you make informed decisions about your financial goals, allowing you to compare different investment scenarios and choose the best strategy to maximize your returns. 


  • What is an investment calculator?

    An investment calculator is a tool that helps you estimate the future value of your investments based on various factors like initial investment, contribution amount, interest rate, and investment timeframe.
  • What are the different types of investment calculators?

    There are investment return calculators for various investment scenarios. Some common ones include:
    • Compound interest calculator: This calculates the growth of your investment over time with interest compounding.

    • SIP calculator: A Systematic Investment Plan (SIP) calculator is specific to mutual fund investments, estimating returns on regular investments.

    • Goal calculators: These help you determine the investment amount needed to achieve a specific financial goal.

  • What information do I need to use an investment calculator?

    Typically, you will need the following details to use an investment calculator:
    • Initial investment amount

    • Regular contribution amount (if applicable)

    • Expected annual interest rate or return rate

    • Investment time horizon (in years)

  • Are investment calculators accurate?

    The results are estimates based on your input. Actual returns may vary depending on market fluctuations and other factors.
  • What are some limitations of investment calculators?

    Calculators do not consider fees, taxes, or inflation that can impact your returns. They also rely on estimated interest rates, which may change over time.

Past 5 Year annualised returns as on 01-05-2024

^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.

Tax benefit is subject to changes in tax laws. Standard T&C Apply
~Source - Google Review Rating available on:-

^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

#The lumpsum benefit is calculated if policyholder invested ₹10000 monthly for 10 years in the fund with a policy term of 20 years. This Point To Point past performance data of last 10 years has been used to illustrate a scenario for the customers benefit. It is assumed that the past 10 years returns would have also been delivered in last 20 years. This is not guaranteed and not in anyway indicative of what the customer may actually get 20 years from now. The investment is subject to market risk and the risk is borne by the policyholder.

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