Enter your principal, rate, and tenure. See the exact rupee difference between yearly, quarterly, and monthly compounding.
A Compound Interest calculator shows you the final value of your investment when interest earns interest. Enter the principal, rate, time, and compounding frequency. Get the maturity amount, total interest earned, and a direct comparison with simple interest.
Compound interest means your interest earns more interest. With simple interest, you earn the same fixed amount every period based on the original sum. With compound interest, each period's interest gets added to your balance. The next period's interest is then calculated on the higher balance. This is why longer investment periods produce significantly bigger returns.
Use this calculator to:
The compound interest formula is:
A = P(1 + r/n)nt
Variables:
Example: ₹1,00,000 at 10% p.a. for 5 years, compounded quarterly:
Put Rs.10,000 at 10% per year. Year 1: Rs.1,000 interest, total Rs.11,000. Year 2: 10% applies to Rs.11,000, so you earn Rs.1,100, total Rs.12,100. Year 3: Rs.1,210. By Year 5: Rs.16,105. Simple interest over the same period gives Rs.15,000. The extra Rs.1,105 comes from interest earning interest each year. The longer you stay invested, the wider this gap gets.
The Rule of 72 gives you the approximate years to double your money. Divide 72 by your annual interest rate. At 8%, your money doubles in 9 years (72 divided by 8). At 12%, it doubles in 6 years. At 6%, it takes 12 years. It is not perfectly precise, but accurate enough for quick planning without a calculator.
More frequent compounding produces better returns. Rs.1 lakh at 10% for 5 years: yearly compounding gives Rs.1,61,051. Quarterly gives Rs.1,63,862. Monthly gives Rs.1,64,531. Daily gives Rs.1,64,866. The difference between yearly and daily compounding is Rs.3,815 on Rs.1 lakh. Most banks use quarterly compounding for FDs. Always check the compounding frequency when comparing two deposits with the same interest rate.
