Call us
Call us
FOR NEW POLICY
Want to buy a new policy online?
Thank you for sharing your details. To receive a call from Tata AIA Financial Advisor.
reCAPTCHA is not working.
No relevant search results found.
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
IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER
Tata AIA Life Insurance
Solution Composition
Unit Linked Individual Life Insurance Savings Plan (UIN:110L112V07)
Tata AIA Life Insurance
Solution Composition
Individual, Non-Linked, Participating Life Insurance Savings Plan (110N162V03)
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:
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.
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:
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.
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.
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:
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.
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.
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.
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.
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.
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.
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.
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.
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
Start Early
Make Disciplined Investments
Make Disciplined Investments
Be Patient
Be Patient
Watch Your Spending
Watch Your Spending
Consider Interest Rates
Consider Interest Rates
Compounding Intervals
Compounding Intervals
Compounding is useful as investors can earn interest on the interest of their investment. Here are some other benefits of compound interest.
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.
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.
Be sure to contribute regularly to the current investment corpus so that you can boost the power of compounding on your investment.
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.
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.
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.
Our experts are happy to help you!
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
FOR EXISTING POLICY 
