Power of Compounding Calculator

Unlock the Power of Compounding for Wealth Creation

The power of compounding is a financial principle where your investments grow exponentially over time as earnings generate more earnings. This calculator helps you visualize how disciplined investing can lead to significant wealth accumulation.

Inputs Required

1. Take Home Annual Salary (₹)

Input your annual take-home salary to estimate the portion of income you can allocate for investments.

2. Investment Percentage (%)

Specify what percentage of your salary you want to invest annually. For example, if your salary is ₹10,00,000 and you choose 20%, you’ll invest ₹2,00,000 annually.

3. Annual Growth Rate of Contributions (%)

Assume how much your annual investment will grow each year. This could account for increments in salary or increasing savings discipline.

4. Investment Duration (Years)

Decide how many years you plan to invest. Longer durations magnify the effect of compounding.

5. Average Annual Investment Growth Rate (%)

Estimate the average return rate your investments will generate annually.

How It Works

The calculator provides a year-by-year breakdown of your investments and growth:

• Year: Each investment year.

• Investment: The amount invested in that year.

• Corpus Value: The total value of your investment corpus, including returns.

• Total Investment Contribution: Cumulative investment from your contributions.

• Contribution from Growth of Corpus: Amount generated purely from the growth of your investments.

• % Contribution from Investment: Percentage of corpus contributed by your investments.

• % Contribution from Growth: Percentage of corpus contributed by compounding growth.

Example Calculation

Inputs:

• Take Home Annual Salary: ₹10,00,000

• Investment Percentage: 20%

• Annual Growth Rate of Contributions: 5%

• Investment Duration: 20 years

• Average Investment Growth Rate: 8%

Results:

• Year 1:

  • Investment: ₹2,00,000

  • Corpus Value: ₹2,16,000

  • Total Contribution: ₹2,00,000

  • Growth Contribution: ₹16,000

• Year 10:

  • Investment: ₹3,25,779

  • Corpus Value: ₹48,50,000

  • Total Contribution: ₹25,00,000

  • Growth Contribution: ₹23,50,000

• Year 20:

  • Investment: ₹5,40,000

  • Corpus Value: ₹2,70,00,000

  • Total Contribution: ₹75,00,000

  • Growth Contribution: ₹1,95,00,000