Compound Interest Calculator
Power of compounding
Compounding more frequently slightly increases your returns. Time matters more than rate — staying invested longer has a bigger impact than chasing a higher rate.
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How compound interest works
Compound interest earns interest on your interest. The formula is:
Tips
- Longer > higher rate. 8% for 20 years hugely beats 15% for 5 years.
- Compounding frequency helps, but slightly. Monthly vs yearly at 8% adds ~0.07% per year.
- Reinvest interest. Withdrawing interest kills compounding.
Worked example: ₹5 lakh at 8%, compounded yearly vs monthly
₹5,00,000 invested for 10 years at 8% annual: yearly compounding gives 5,00,000 × (1.08)¹⁰ = ₹10,79,462. Monthly compounding (8%/12 per month) gives ₹11,09,570 — about ₹30,000 more from the same rate, purely because interest starts earning interest sooner. Double the horizon to 20 years and the yearly-compounded value reaches ₹23.3 lakh — 4.66× the original, while simple interest would have delivered only 2.6×. That widening gap is the whole point of compound interest.
How this calculator works
The tool applies A = P(1 + r/n)^(nt) with your chosen compounding frequency (yearly, half-yearly, quarterly, monthly or daily), plus optional recurring additions. All maths runs in your browser — no login, nothing stored. For the full formula walkthrough with more examples, see How to Calculate Compound Interest; for monthly SIP-style investing use the SIP Calculator.
Frequently asked questions
What is compound interest?
Interest calculated on both the principal and the accumulated interest of prior periods. It makes savings grow faster than simple (flat) interest.
What is the compound interest formula?
A = P(1 + r/n)^(nt), where P is principal, r the annual rate, n compounding frequency per year and t years. Example: ₹5 lakh at 8% yearly for 10 years = 5,00,000 × 1.08¹⁰ = ₹10.79 lakh.
Does compounding frequency matter?
Yes — the more frequent the compounding, the slightly higher your final value. Monthly beats yearly for the same rate.
Is the return rate guaranteed?
No. Use 7–9% for FDs/bonds and 10–12% for equity over long periods. Higher rates over short horizons are unreliable.
How is this different from SIP?
This calculator is for one-time (lump sum) savings. For monthly contributions, use the SIP Returns Calculator.