Tata AIA Compound Interest Calculator

Start building your wealth today to enjoy the power of compounding on your investment!

When you budget your finances, an understanding of how compounding works can help guide you in making informed decisions. Read more A compound interest calculator is a useful tool that allows you to estimate how your investments will grow over time.
Unlike simple interest, which is calculated only on the principal amount, compound interest calculates interest on both the principal and on the interest already earned in previous periods. This means that with each compounding period (monthly, quarterly, or annually), your investment grows more rapidly. 
The frequency of compounding and the time you stay invested play a major role in how the final amount grows. Over the years, this effect can result in a larger amount when compared to the simple interest amount.
Using a calculator, it is easier to see how different amounts, time frames, and rates can impact your overall investment worth.
Read on to learn more about how compound interest works. Read less

When you budget your finances, an understanding of how compounding works can help guide you in making informed decisions. Read more A compound interest calculator is a useful tool that allows you to estimate how your investments will grow over time.
Unlike simple interest, which is calculated only on the principal amount, compound interest calculates interest on both the principal and on the interest already earned in previous periods. This means that with each compounding period (monthly, quarterly, or annually), your investment grows more rapidly. 
The frequency of compounding and the time you stay invested play a major role in how the final amount grows. Over the years, this effect can result in a larger amount when compared to the simple interest amount.
Using a calculator, it is easier to see how different amounts, time frames, and rates can impact your overall investment worth.
Read on to learn more about how compound interest works. Read less

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Compound Interest Calculator

Please enter valid amount

Please enter up to 99%

Please enter between 3-99 years

Please enter up to 99 years

Stay invested year can not be less than Years of payment

You Get

₹76.6 Lakh

You Pay

₹12 Lakh

You Pay

You Get


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IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER
 

What is the Power of Compounding?

When your earnings are reinvested at the same rate of return each year to increase your principal amount, it is known as compounding. This simply means that the funds you have invested are earning interest and are showing steady growth instead of lying dormant during the investment tenure. Therefore, if the earnings are reinvested each year at the same interest rate, the year-on-year growth of the principal amount will be continuous.


With compound interest, your investment grows faster because you earn interest not just on your original amount, but also on the interest it has already earned. Investors make use of compound interest to invest and grow their wealth over a long investment horizon. This makes it easier for them to plan their financial goals as well. When the investment period is longer, the potential gains may be higher. By starting early, an investor can benefit more from compound interest, making it easier to build long-term wealth. Over time, the interest earnings grow, resulting in a larger investment corpus.


Compound interest can be calculated by:

  • Annual compounding
  • Semi-annual compounding
  • Quarterly compounding
  • Monthly compounding
  • Daily compounding

Compounding applies to investments, loans and deposits. The frequency of compounding plays an important role here. If the frequency of compounding is higher, the compound interest will also be greater. Depending on the investment you may have selected, you can benefit from the frequency of compounding. For instance, interest on credit card loans is compounded monthly, while interest on savings accounts may be compounded daily.


Investors, therefore, invest small sums of funds regularly for a long investment horizon to get the most out of compound interest. For example, suppose you invest a principal amount of ₹100 and consider the compound interest rate as 5% per annum; the interest earned by the end of the year is ₹5, which is 5% of ₹100. If you reinvest this amount instead of withdrawing it, you earn another 5% on the interest of the new principal amount, which is ₹105. Hence, your new interest earned on this amount will be ₹5.25.

What is a Compound Interest Calculator?

The compound interest calculator is an easy-to-use, free tool that helps you calculate the expected returns on your investment. When you use this online tool, be sure to mention the following details:

  • Investment Amount/Principal Amount
  • The Investment Horizon/Term
  • Compounding Frequency – (Daily, Weekly, Monthly, Quarterly, Semi-annual, or Annual)
  • Expected Rate of Return

The compound interest calculator operates based on the following formula: CI = P (1 + r/n)^nt.

Where
 

CI = Compound Interest / Final compounded amount

P = Principal amount

R = Annual nominal interest rate as a percent

r = R/100

n = Number of compounding periods per unit of time

T = Time in years
 

With the help of the CI formula, you can understand how your investment compounds.

You can change the interest rates and the principal amount on the calculator as per your preference to see how compound interest works differently on various investment amounts.

Let us understand the power of the compound interest calculator with an example.

Suppose you invest ₹50,000 with an annual interest rate of 10% for 5 years. Let us input these values and calculate the final compounded amount you would receive after 5 years.
 

P = ₹50,000, 

r =  10/100 = 0.1

n = 1

T =  5 years.

CI = P (1 + r/n)^nt = 50000 (1 + 0.1/1)^(1*5) = 80.526 (approximately).
 

Therefore,  in the 5th year, your total amount would become ₹80,526 with an interest amount of ₹30,526.

Difference Between Simple and Compound Interest


It is essential to know the difference between simple and compound interest so you can make informed financial choices. You can use a simple interest calculator and a compound interest calculator, and see how both types of interest rates impact the amount invested.
 

Aspect

Simple Interest

Compound Interest

Interest Applied On

Only on the amount invested in the beginning

On the initial amount as well as on the interest accumulated earlier

Principal Amount

Stays the same throughout

Increases after every compounding period

Formula

SI = (P × T × R) / 100

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


A compound interest calculator enables you to estimate how your investment can grow over time based on the rate, time, and compounding frequency.

Benefits of Using a Compound Interest Calculator


Using a compound interest calculator India can be highly beneficial in several ways. This free online tool is open to everyone for use and is preferred by investors since the results provided by it can be useful in making informed investment decisions. The benefits of using this calculator are:

Reliable Tool

Reliable Tool

Although the actual results of your investment may differ, a compound interest calculator can be reliable as it provides you with a close estimate of how much you need to invest and for how long the investment needs to continue for you to meet your investment goals.

Easily Customisable

Easily Customisable

You can change the various values, such as the investment amounts and tenures, to make different investment plans. This helps you understand which investment horizon is suitable for the optimal growth of your investments.

Calculates Potential Returns 

Calculates Potential Returns 

As mentioned, do not expect accurate results as the actual rate of interest and other factors, such as inflation, will vary periodically. However, by using other tools like a compound interest calculator with inflation for your financial planning, you can acquire an estimate of how much to invest to achieve your desired corpus.

How to Use the Tata AIA Compound Interest Calculator?

 

The compound interest calculator is a free online tool that can be easily accessed on the official Tata AIA Life Insurance website. All this calculator needs is a few details, and in less than a minute, you will be able to calculate compound interest and how the power of compounding works on your investments.
 

Given below are some of the specifics that need to be mentioned in our power of compounding calculator.
 

  • The Investment Amount

    This is the total amount of funds that you want to invest. You can choose any amount and decide the frequency of the investment. For instance, you may want to invest Rs 1000 each month.

  • The Investment Tenure

    Next, you get to choose how many years you would like to continue this investment. This enables you to decide the number of years during which you can invest your funds and allow them to grow.

  • Estimated Rate of Interest

    Pick an assumed or estimated rate of interest that can help you understand at what rate your investment will grow. The rate of interest doesn't need to be the same as the one you select, but it should be a realistic figure.

After filling in these details, click on “Calculate” at the bottom of the calculator and on the next page, you will be able to see the total expected corpus you can generate in the given investment period, with the specified funds and estimated rate of interest.
 

Let us understand the working of the Tata AIA Compound Interest Calculator with an example. Suppose you want to invest ₹10,000 on a yearly basis for 5 years, with the assumed rate of interest at 7% and want to continue with the investment for 10 years, then fill in these details on the online calculator and click on Calculate. You will then be able to see the total corpus generated on your investment, which is the estimated return on your investment.

How Does the Power of Compounding Work in Investments?

When you invest a certain amount and start earning interest not only on the principal but also on the accumulated interest, it is known as compounding. Simply put, the potential gains earned from your investment are reinvested in the same investment.
 

This is how the power of compounding can aid in the growth of your investment over the investment horizon, especially if it is long-term. Therefore, it is essential that the investment you make should be frequent and steady so that your investments can grow over a given time period. This ensures you can achieve your financial goals with less effort while making your capital work harder.
 

Calculating compound interest can appear to be a difficult process for many investors. However, these calculations can be simplified by using a compound interest calculator. You can head to the Tata AIA Life Insurance official website to use our Compound Interest Calculator and compute the expected returns on your investment.

Key Rules of Investment that Enable the Power of Compounding


Investing and saving is a habit that requires a certain level of discipline. To help you invest in a disciplined way and benefit from the power of compounding, here are some important rules to follow:

  • Start Early

    You can start investing at any age, but the earlier you start, the better it is. This is because a longer tenure gives your investments more time to grow and may help beat the inflation rate over the long term. Moreover, in the case of 1market-linked investments such as ULIPs, a longer investment tenure may protect your investment from short term market fluctuations.

    Start Early

    You can start investing at any age, but the earlier you start, the better it is. This is because a longer tenure gives your investments more time to grow and may help beat the inflation rate over the long term. Moreover, in the case of 1market-linked investments such as ULIPs, a longer investment tenure may protect your investment from short term market fluctuations.
  • Make Disciplined Investments

    When you start investing, it is essential to maintain discipline so that you can make the most out of your investments. Whether you’re a low-risk or high-risk investor, having a plan and being regular can help you stay on track and regularly invest to meet your future financial goals.

    Make Disciplined Investments

    When you start investing, it is essential to maintain discipline so that you can make the most out of your investments. Whether you’re a low-risk or high-risk investor, having a plan and being regular can help you stay on track and regularly invest to meet your future financial goals.
  • Be Patient

    At times, earning swift returns may be possible, but for the most part, investing for the long term should be preferred. Always give your investments time to grow and appreciate. This will also help your investment keep up with the inflation rate and protect it from the impact of market fluctuations. You should set a long-term goal and plan your investment horizon accordingly.

    Be Patient

    At times, earning swift returns may be possible, but for the most part, investing for the long term should be preferred. Always give your investments time to grow and appreciate. This will also help your investment keep up with the inflation rate and protect it from the impact of market fluctuations. You should set a long-term goal and plan your investment horizon accordingly.
  • Watch Your Spending

    Improper spending decisions may result in minimal to no savings and investments. Therefore, you must plan your expenses, no matter how basic they may be. As far as possible, reduce the frequent and large expenses so that you can grow your savings and simultaneously meet your financial goals.

    Watch Your Spending

    Improper spending decisions may result in minimal to no savings and investments. Therefore, you must plan your expenses, no matter how basic they may be. As far as possible, reduce the frequent and large expenses so that you can grow your savings and simultaneously meet your financial goals.
  • Consider Interest Rates

    Over the years, the interest rates may change periodically. Hence, when you make an investment, consider the rate of interest as it will help you calculate compound interest and its potential gains. A higher annual compound interest rate means the possibility of gaining higher potential gains.

    Consider Interest Rates

    Over the years, the interest rates may change periodically. Hence, when you make an investment, consider the rate of interest as it will help you calculate compound interest and its potential gains. A higher annual compound interest rate means the possibility of gaining higher potential gains.
  • Compounding Intervals

    There is a direct relation between the frequency of compounding and wealth accumulation. Therefore, if you are looking at greater wealth accumulation, it means that the frequency of compounding will have to be high as well. This also means you will have to opt for a medium to long investment tenure.

    Compounding Intervals

    There is a direct relation between the frequency of compounding and wealth accumulation. Therefore, if you are looking at greater wealth accumulation, it means that the frequency of compounding will have to be high as well. This also means you will have to opt for a medium to long investment tenure.

Advantages of the Power of Compounding

Compounding is useful as investors can earn interest on the interest of their investment. Here are some other benefits of compound interest.

  • Accelerated Growth with Compounding:

    With compound interest, your capital grows faster because you earn interest not just on your investment, but also on the interest it earns over time.

  • Benefits of Long-Term Investment:

    The longer the investment tenure/horizon, the greater the potential to earn higher gains on your investment. Therefore, investors may aim for a long-term investment.

  • Boost Gains with Regular Contributions:

    Be sure to contribute regularly to the current investment corpus so that you can boost the power of compounding on your investment.

  • Higher Gains with Frequent Compounding:

    You may increase the possibility of higher potential gains if the number of compounding frequencies is high. For example, if your investment is compounded each month, you may acquire more interest than you would through annual compounding.

What is Daily, Monthly & Yearly Compounding?

When comparing compound interest with simple interest, it is clear that compound interest offers greater advantages. The compounding frequency means the number of times the interest has been calculated on the investment during a given year.

An increase in the number of compoundings means that the interest is being compounded more frequently. Hence, be sure to look at how often interest is compounded when choosing an investment option.
 

  • Daily Compounding: The interest will be compounded daily. In such cases, you can use a daily compound interest calculator to compute the potential interest earned.
  • Monthly Compounding: If you select an investment where the interest is compounded on a monthly basis, it indicates monthly compounding.
  • Yearly Compounding: The interest on your investments will be compounded annually.

In simple terms, the compounding frequency determines how often interest is added to your investment, allowing you to earn additional potential gains at each interval.

Therefore, it is important that you give your capital enough time to grow. Starting your investment journey early can give your investments time to grow, even if the investment amount is small.


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FAQ's on Compound Interest Calculator

What is the meaning of the power of compounding?

The power of compounding means earning interest on both your original investment and the interest it earns. In compound interest, the principal amount increases each year since the interest on the initial principal amount is added to get a new principal amount.

What is the difference between savings and investments?

Savings are often associated with banks and other possibly low-risk instruments where your funds are saved, and each year or through the policy term, the savings grow in accordance with a predetermined fixed rate of interest. However, in the case of investments, the investment instruments may carry a slightly higher amount of potential risk, even though there are low-risk 1market-linked instruments.

Does the power of compounding only apply to investments?

No, the power of compounding also applies to investments and loans; however, it is a term more closely associated with investments such as mutual funds or savings plans.

Does compound interest help create wealth?

Compound interest helps your funds grow over the long term through the power of compounding. Therefore, it can be useful for investors who are seeking to create and grow their wealth over the long term.

Why is compound interest better than simple interest?

In compound interest, the capital grows each year as the interest on the principal amount is added to the principal amount to create a new principal amount. However, with simple interest, you only earn interest on the original amount, not on the interest.

What is the frequency with which interest is compounded?

Depending on the type of scheme or investment you have opted for, compound interest can work on your investments on a yearly, half-yearly, quarterly, monthly, and even daily basis.

Is it possible to calculate compound interest?

You can calculate compound interest with the Tata AIA Compound Interest Calculator. All you need to do is fill in some necessary investment details such as the amount, investment horizon and the estimated rate of return to get the result.

Is the compound interest calculator free of cost and easy to use?

Yes, the compound interest calculator is a free online tool that takes a few minutes to calculate the compound interest once you fill in the correct details.

Is compound interest more effective on a daily basis or a monthly basis?

Daily compounding of your investments can be more effective since the returns may be potentially higher. Hence, daily compounding may be preferred by investors as compared to monthly compounding.

Disclaimers

  • IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER.
  • The linked insurance product do not offer any liquidity during the first five years of the contract. The policy holder will not be able to surrender/withdraw the monies invested in linked insurance products completely or partially till the end of the fifth year.
  • All advertisements of participating insurance products must disclose that: (i) The risk factors of the bonuses projected under the product are not guaranteed. (ii) Past performance doesn't construe any indication of future bonuses, and (iii) these products are subject to the overall perforamance of the insurer in terms of investments, management of expenses, mortality and lapses.
  • The complete name of Tata AIA Fortune Pro is Tata AIA Life Insurance Fortune Pro (UIN: 110L112V07) – Non-Participating, Unit Linked Individual Life Insurance Savings Plan.
  • The complete name of Tata AIA Smart Value Income Plan is Tata AIA Life Insurance AIA Smart Value Income Plan (UIN: 110N162V03) - Individual, Non-Linked, Participating Life Insurance Savings Plan
  • Please make your own independent decision after consulting your financial or other professional advisor.
  • 1Market-linked returns are subject to market risks and terms & conditions of the product. The assumed rate of returns or illustrated amount may not be guaranteed and depends on market fluctuations.
  • +5 year computed NAV for Multi Cap Fund as of March 2025. Other funds are also available. Benchmark of this fund is S&P BSE 200.
  • $Tax benefits of up to ₹46,800 u/s 80C is calculated at highest tax slab rate of 31.20% (including cess excluding surcharge) on life insurance premium paid of ₹1,50,000. Tax benefits under the policy are subject to conditions laid under Section 80C, 80D,10(10D), 115BAC and other applicable provisions of the Income Tax Act,1961. Good and Service tax and Cess, if any will be charged extra as per prevailing rates. The Tax-Free income is subject to conditions specified under section 10(10D) and other applicable provisions of the Income Tax Act,1961. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details, before acting on above.
  • THE LINKED INSURANCE PRODUCT DO NOT OFFER ANY LIQUIDITY DURING THE FIRST FIVE YEARS OF THE CONTRACT. THE POLICY HOLDER WILL NOT BE ABLE TO SURRENDER/WITHDRAW THE MONIES INVESTED IN LINKED INSURANCE PRODUCTS COMPLETELY OR PARTIALLY TILL THE END OF THE FIFTH YEAR.
  • Past performance is not indicative of future performance.
  • All investments made by the Company are subject to market risks. The Company does not guarantee any assured returns. The investment income and price may go down as well as up depending on several factors influencing the market.
  • %Cash bonuses (if declared) will be paid out at the end of the chosen pay-out frequency.
  • #Only available with cash bonus option.
  • Insurance cover is available under the product.
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