Power of Compounding Calculator
Visualize how compound interest grows your investment exponentially over decades. Demonstrates the magic of long-term investing.
Power of Compounding Calculator
Result
How it works
Formula Used
Compound Growth = (Investment × (1+r)^n) split into Principal vs Growth Shows year-by-year how growth portion increasingly exceeds contributions
Smart Tips
- In later years, growth > contributions (the power!)
- Early years: contributions dominate; later years: growth dominates
- Perfect visualization for explaining compounding to family
Best Used For
Understand compounding benefit, motivate long-term investing
FAQs
When does compounding really start working?
Year 1-5: contributions > growth. Year 6-15: becoming equal. Year 16+: growth > contributions. This is why long-term investing matters. At 25 years, growth often = 60-70% of corpus, contributions = 30-40%. Time is money.
Can I see the compounding effect visually?
Yes, most calculators show year-wise breakdown. Chart shows exponential curve in later years. Growth portion becomes bigger each year. This visual makes 'magic of compounding' real and motivating.
Does increasing SIP annually improve compounding?
Significantly. Compare: flat ₹60k annual vs ₹60k-₹120k (10% annual increase). At 10% return for 25 years, increase adds ₹50-60L more corpus. Every increase compounds until retirement.
Why does growth become bigger than contributions?
Because growth compounds on growing amount. Year 1: ₹10L generates ₹1L growth. Year 2: ₹11L generates ₹1.1L growth. By year 20: ₹40L generates ₹4L growth. Growth feeds on itself exponentially.
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