Compound Interest Calculator

Calculate compound interest with different compounding frequencies

Principal Amount (₹)

Annual Interest Rate (%)

Compounding Frequency

Time Period (Years)

Additional Months

About Compound Interest

Formula: A = P × (1 + r/n)^(n×t), where P = principal, r = annual rate, n = compounding frequency, t = time in years
Compound interest: Interest earned on both the principal and previously accumulated interest
Simple interest: Interest earned only on the principal amount
More frequent compounding = higher returns (monthly > quarterly > half-yearly > yearly)
Effective Annual Rate (EAR): (1 + r/n)^n - 1 — the actual annual return accounting for compounding
Rule of 72: Years to double = 72 / interest rate (approximate)
Compound interest is the foundation of long-term wealth creation — the "eighth wonder of the world"

About Compound Interest Calculator

The Compound Interest Calculator computes the interest earned on deposits and investments where interest is calculated on both the principal and previously accumulated interest. Compound interest is the most powerful wealth-building mechanism — Albert Einstein reportedly called it the "eighth wonder of the world." Our calculator handles various compounding frequencies (monthly, quarterly, semi-annually, annually) and shows the dramatic difference between simple and compound interest over time.

The key to maximizing compound interest is time — the longer your money stays invested, the more dramatic the compounding effect. A ₹1 lakh investment at 12% annual return grows to ₹3.11 lakh in 10 years with annual compounding, but the same investment grows to ₹9.65 lakh in 20 years and ₹29.96 lakh in 30 years. This exponential growth is why starting early is the most important investing advice. Our calculator illustrates this power with detailed year-wise and month-wise breakdowns.

Key Features

Compound interest with multiple compounding frequencies
Year-wise growth table with interest accumulation
Simple vs compound interest comparison
Regular contribution (SIP) mode
Inflation-adjusted real return calculation

Frequently Asked Questions

What is the formula for compound interest?

The compound interest formula is: A = P × (1 + r/n)^(n×t), where A is the final amount, P is the principal, r is the annual interest rate (decimal), n is the number of times interest is compounded per year, and t is the number of years. The compound interest earned is A - P. For monthly compounding, n = 12; for quarterly, n = 4; for annual, n = 1.

How does compounding frequency affect returns?

Higher compounding frequency leads to slightly higher returns. For example, ₹1 lakh at 12% for 10 years: annual compounding yields ₹3,10,585; quarterly yields ₹3,26,204; monthly yields ₹3,30,039; and daily yields ₹3,31,942. The difference is small for short periods but becomes significant over decades. This is why banks often quote effective annual rates — to help consumers compare products with different compounding frequencies.

Compound Interest Calculator