Compound Interest Calculator
Growth with any compounding frequency
- Amount invested₹1.00 L39%
- Interest earned₹1.59 L61%
| Amount invested | ₹1.00 L | 38.6% |
| Interest earned | ₹1.59 L | 61.4% |
Year-wise breakdown
| Year | Opening | Added | Interest | Closing |
|---|---|---|---|---|
| 1 | ₹1,00,000 | — | ₹10,000 | ₹1,10,000 |
| 2 | ₹1,10,000 | — | ₹11,000 | ₹1,21,000 |
| 3 | ₹1,21,000 | — | ₹12,100 | ₹1,33,100 |
| 4 | ₹1,33,100 | — | ₹13,310 | ₹1,46,410 |
| 5 | ₹1,46,410 | — | ₹14,641 | ₹1,61,051 |
| 6 | ₹1,61,051 | — | ₹16,105 | ₹1,77,156 |
| 7 | ₹1,77,156 | — | ₹17,716 | ₹1,94,872 |
| 8 | ₹1,94,872 | — | ₹19,487 | ₹2,14,359 |
| 9 | ₹2,14,359 | — | ₹21,436 | ₹2,35,795 |
| 10 | ₹2,35,795 | — | ₹23,579 | ₹2,59,374 |
Understand the result
About the Compound Interest Calculator
What is compound interest?
Compound interest is interest earned on both your original money and the interest it has already earned. Each period, interest is added to the balance, and the next period’s interest is worked out on that larger balance. Over long periods this snowball effect makes compound interest grow much faster than simple interest.
This compound interest calculator works out the maturity value and interest for yearly, half-yearly, quarterly, monthly or daily compounding, with optional monthly additions, and shows how much of the result comes from compounding compared with simple interest.
How this calculator works
Compound interest is interest earning interest. Simple interest pays only on the original principal, so it grows in a straight line. Compound interest adds each period’s interest back to the balance, so the next period earns on a larger base — and the curve bends upward.
Compounding frequency matters, though less than people expect. The same 10% quoted rate is worth 10% compounded yearly, 10.25% half-yearly, 10.38% quarterly and 10.47% monthly. That gap is the difference between the nominal rate a bank advertises and the effective rate you actually receive, which is why the effective annual rate is the number to compare across products.
Adding a monthly contribution turns this into a recurring-deposit or SIP calculation: the principal compounds, and each new contribution starts its own smaller compounding stream.
Time does far more work than rate. Doubling the rate roughly doubles the outcome; doubling the years can multiply it several times over.
Formula
A = P × (1 + r/n)^(n × t) P = principal r = annual rate t = years n = compounding periods per year Effective annual rate = (1 + r/n)^n − 1
Worked example
- ₹1,00,000 at 10% a year for 10 years, compounded yearly.
- A = 1,00,000 × 1.10¹⁰ = ₹2,59,374.
- Simple interest at the same rate would pay only ₹2,00,000 — compounding adds ₹59,374 on its own.
How rate and time change the result
| Rate | After 10 years | After 20 years | After 30 years |
|---|---|---|---|
| 6% | ₹1,79,085 | ₹3,20,714 | ₹5,74,349 |
| 8% | ₹2,15,892 | ₹4,66,096 | ₹10,06,266 |
| 10% | ₹2,59,374 | ₹6,72,750 | ₹17,44,940 |
| 12% | ₹3,10,585 | ₹9,64,629 | ₹29,95,992 |
Two things stand out. Doubling the time more than doubles the gain, and a few percentage points of extra return make a huge difference over 30 years — ₹1 lakh at 12% ends at almost three times the value at 8%.
Adding money every month
Most people do not invest once and wait; they add money regularly. Enter a monthly contribution in the calculator to see the combined effect of the initial amount and ongoing additions — the same maths that drives a SIP or a recurring deposit. Each addition compounds from the month it is made.
Assumptions & important notes
What this calculator assumes
- The rate stays constant for the whole period. Real deposit rates move with the rate cycle.
- Interest is reinvested rather than withdrawn. Taking the interest out converts this to simple interest.
- Monthly contributions are added at the start of each month.
- Tax is not deducted. Interest on deposits is taxable at your slab rate every year, which materially reduces the compounding effect.
Important notes
- A useful shortcut is the Rule of 72: divide 72 by the rate to get the years needed to double your money. At 9%, that is about eight years.
- For taxable deposits, the post-tax rate is what compounds. At a 30% slab, a 7% FD effectively compounds at 4.9%.
- Banks in India compound savings account interest quarterly and fixed deposits usually quarterly too.
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest is always calculated on the original principal, so it grows linearly. Compound interest is calculated on principal plus accumulated interest, so it accelerates. The stat above shows exactly what that difference is worth for your inputs.
Does more frequent compounding make a big difference?
Less than most people assume. Moving from yearly to monthly compounding on a 10% rate raises the effective rate from 10% to about 10.47%. Going from monthly to daily adds barely another 0.04%.
What is the effective annual rate?
The rate that, compounded once a year, produces the same result as the quoted nominal rate compounded more often. It is the only fair way to compare two products with different compounding frequencies.
How do I use the Rule of 72?
Divide 72 by the annual rate to estimate the years to double. At 12% it is six years, at 8% it is nine. It is an approximation but accurate enough for mental arithmetic at ordinary rates.
Which investments pay compound interest?
Cumulative fixed deposits and recurring deposits (quarterly), PPF and Sukanya Samriddhi (yearly), NSC (yearly, paid at maturity) and savings accounts. Market investments such as mutual funds compound too, through reinvested gains, although not at a fixed rate.
How do I calculate compound interest for a few months?
Use A = P × (1 + r/n)^(n × t) with t in years — six months is 0.5. For quarterly compounding over nine months, n = 4 and t = 0.75, giving three compounding periods.
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