1. What is the National Savings Calculator?

The National Savings Calculator for Sri Lanka calculates compound interest savings using the principal amount, interest rate, and time period. It helps individuals and institutions estimate future savings growth for financial planning purposes.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

Where:

• \( P \) — Principal amount ($)
• \( r \) — Annual interest rate (decimal)
• \( t \) — Time period (years)

Explanation: The formula calculates the future value of savings by applying compound interest over the specified time period.

3. Importance of Savings Calculation

Details: Accurate savings calculation is crucial for financial planning, retirement planning, investment decisions, and understanding the power of compound interest in wealth accumulation.

4. Using the Calculator

Tips: Enter principal amount in dollars, interest rate as a decimal (e.g., 0.05 for 5%), and time period in years. All values must be valid (principal > 0, rate ≥ 0, time ≥ 1).

5. Frequently Asked Questions (FAQ)

Q1: What is compound interest?
A: Compound interest is interest calculated on the initial principal and also on the accumulated interest from previous periods.

Q2: How does this differ from simple interest?
A: Simple interest is calculated only on the principal amount, while compound interest includes interest on both principal and accumulated interest.

Q3: What are typical interest rates in Sri Lanka?
A: Interest rates vary by institution and account type, typically ranging from 3% to 15% annually for savings accounts and fixed deposits.

Q4: Can this calculator be used for monthly compounding?
A: This calculator uses annual compounding. For monthly compounding, the formula would need adjustment to account for more frequent compounding periods.

Q5: Is this calculator specific to Sri Lankan currency?
A: While designed for Sri Lankan context, the calculator works with any currency as long as consistent monetary units are used.