Compound Interest Calculator
See exactly how your investment grows when interest compounds on itself — adjust principal, rate, tenure, and compounding frequency to get your total value and interest earned instantly.
Formula: A = P × (1 + r/n)^(n×t) — compounding Monthly (12× per year). Indicative only; actual returns depend on the product terms.
What Is Compound Interest?
Compound interest is interest calculated on both your original principal and on all the interest you have already earned. Unlike simple interest — which only grows on the initial amount — compound interest snowballs: every time it compounds, the new interest is added to the base for the next period. Over time this produces exponential growth, which is why long-term investors consistently prefer compound-interest products over simple-interest alternatives.
The Compound Interest Formula
A = P × (1 + r/n)^(n × t)
Where: A = Total amount (principal + interest earned), P = Principal (your initial investment), r = Annual interest rate (as a decimal — so 10% becomes 0.10), n = Number of times interest compounds per year (12 for monthly, 4 for quarterly, 365 for daily), t = Investment tenure in years.
Interest Earned = A − P
How to Use This Calculator
- Enter your principal — the lump sum you are investing.
- Set the annual interest rate using the slider or type it in.
- Choose your investment tenure in years.
- Select the compounding frequency: daily, weekly, monthly, quarterly, semi-annually, or annually.
- The calculator instantly displays your total maturity value, original principal, and total interest earned.
Why Compounding Frequency Matters
The more frequently your investment compounds, the higher your total return — even at the same annual rate. Each compounding event adds interest to the growing base, which then earns interest itself in the next period.
- Daily compounding yields the most — interest is added 365 times a year.
- Monthly compounding (typical for many savings products) produces noticeably higher returns than quarterly.
- Annual compounding gives the lowest returns among the available frequencies.
- Example: ₹10,000 at 10% for 1 year — annually gives ₹11,000 while quarterly gives ₹11,038. The difference widens significantly at longer tenures and higher amounts.
Compound Interest vs Simple Interest
| feature | simple interest | compound interest |
|---|---|---|
| interest basis | original principal only | principal + accumulated interest |
| growth pattern | linear over time | exponential over time |
| interest earned each period | remains constant | increases every period |
| long-term returns | lower | significantly higher |
| best suited for | short-term loans, car loans | savings accounts, fds, mutual funds, long-term investments |
Worked Examples
- ₹20,000 at 10% for 5 years (yearly compounding): A = 20,000 × (1.10)^5 = ₹32,210. Interest earned = ₹12,210.
- ₹50,000 at 8% for 3 years (quarterly compounding): A = 50,000 × (1.02)^12 = ₹63,412. Interest earned = ₹13,412.
- ₹1,00,000 at 12% for 2 years (monthly compounding): A = 1,00,000 × (1.01)^24 = ₹1,26,824. Interest earned = ₹26,824.
- ₹10,000 at 10% for 1 year (daily compounding): A = 10,000 × (1 + 0.10/365)^365 = ₹11,051. Interest earned = ₹1,051.
How This Calculator Helps You
- Instantly see how your savings or investment grows over any time horizon — no manual calculations needed.
- Compare different compounding frequencies side-by-side: switch from monthly to quarterly and see how much you gain or lose.
- Plan smarter: small increases in rate or tenure can produce large differences at long horizons — the calculator makes that visible immediately.
- Model different scenarios — conservative (7%), moderate (10%), optimistic (14%) — to set realistic financial goals.
Where Compound Interest Works for You
- Fixed Deposits (FDs) — compounded quarterly by most banks; check your bank's frequency as it directly affects your maturity amount.
- Recurring Deposits (RDs) — monthly contributions compounded quarterly; use the RD calculator for exact maturity figures.
- Public Provident Fund (PPF) — compounded annually at a government-set rate; the long 15-year lock-in magnifies the compounding effect significantly.
- National Pension System (NPS) — market-linked growth that also benefits from compounding across equity and debt allocations.
- Equity Mutual Funds — no stated interest rate, but returns compound over time as NAV grows on an ever-larger base.
- Savings accounts — the most accessible compound-interest product; usually compounded quarterly or monthly.