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Interest Income Calculator
How much you earn on your investments can signficantly impact the money you have in future. You simply can not compare returns from FD to MF to PPF. Because all of them follow different compounding priniciple.
First important pararmeter is ofcouse Interest rates. You may think 5% returns vs 6% returns is just differnce of 1% however over years this difference can become huge. So interest rate is also very important metric in your returns. This table shows how 1% difference can change your returns every year. (Assuming returns are quarterly compounding)
Impact of 1% difference in Interest rate on your investments over years
| Investment |
Difference in Returns after 1Y |
Difference in Returns after 2Y |
Difference in Returns after 5Y |
Difference in Returns after 10Y |
Difference in Returns after 20Y |
|---|---|---|---|---|---|
| 10,000 | 100.38 | 201.76 | 512.06 | 1,050.33 | 2,210.98 |
| 50,000 | 501.88 | 1,008.79 | 2,560.28 | 5,251.65 | 11,054.90 |
| 1,00,000 | 1003 | 2017 | 5120 | 10503 | 22109 |
This table shows if you have started investing 1000 rupees every month, how much impact it can have basis the interest rate/returns you can generate over years.
Returns on 10000 rupee investment and compounding impact
| Returns |
After 5 Years |
After 10 Years |
After 20 Years |
After 30 Years |
After 50 Years |
|---|---|---|---|---|---|
| Investment | 10k | 10k | 10k | 10k | 10k |
| 5% Returns | 12.8k | 16.4k | 27.0k | 44.4k | 1.2L |
| 7.5% Returns | 14.5k | 21.0k | 44.2k | 92.9k | 4.1L |
| 10% Returns | 16.4k | 26.8k | 72.1k | 1.94L | 13.9L |
| 20% Returns | 26.5k | 70.4k | 5.0L | 34.9L | 17.3Cr |
Second importatnt parameter is Frequency of interest payment. If you getting returns which is quarterly compounding that means; every quarter interest paid on your deposits and it is added in your total deposit amount. So next quaarter; you earn additional inteerest rate on previously earned interet also thus increasing overall returns for you.
Banks generally pay intrest which is quarterly compounding however PPF generally pays interest which is annual compounding. For mutual funds, there are varrious options available for your choice.
If you are getting 6% returns with annual frequency compared to 6% returns with compounding frequency than both are different. Check how varying compounding frequency can change your returns.
Banks generally pay intrest which is quarterly compounding however PPF generally pays interest which is annual compounding. For mutual funds, there are varrious options available for your choice.
If you are getting 6% returns with annual frequency compared to 6% returns with compounding frequency than both are different. Check how varying compounding frequency can change your returns.
Impact of 1000 rupees invested for 5 years at different compounding frequency
| Interest Rate |
Quarterly Compounding |
Semi-Annual Compounding |
Annual Compounding |
Simple Interest Rate |
||||
|---|---|---|---|---|---|---|---|---|
| Amount after 5 years | Effective annualised interest rate | Amount after 5 years | Effective annualised interest rate | Amount after 5 years | Effective annualised interest rate | Amount after 5 years | Effective annualised interest rate | |
| 5% | 1282.04 | 5.09% | 1280.08 | 5.06% | 1276.28 | 5.00% | 1250.00 | 4.56% |
| 7% | 1414.78 | 7.19% | 1410.60 | 7.12% | 1402.55 | 7.00% | 1350.00 | 6.19% |
| 10% | 1638.62 | 10.38% | 1628.89 | 10.25% | 1610.51 | 10.00% | 1500.00 | 8.45% |
| 12% | 1806.11 | 12.55% | 1790.85 | 12.36% | 1762.34 | 12.00% | 1600.00 | 9.86% |