Compound Interest Calculator
See the power of compounding. Calculate compound interest with yearly, half-yearly, quarterly, or monthly compounding and visualise year-by-year growth.
Last updated: 2026-03-28
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Important: This calculator provides estimates based on the inputs and assumptions you provide. Results are mathematical projections, not financial advice or recommendations. Actual outcomes will vary based on market conditions, policy changes, individual circumstances, and factors not captured by this tool. Verify all figures independently and consult qualified professionals before making financial decisions.
Understanding Compound Interest
Compound interest is one of the most powerful concepts in finance. Albert Einstein reportedly called it the "eighth wonder of the world." Unlike simple interest, which is calculated only on the principal, compound interest earns interest on previously accumulated interest — causing exponential growth over time.
Compound Interest Formula
The standard compound interest formula is:
- A = P × (1 + r/n)n×t
- CI = A − P
Where P = Principal, r = Annual interest rate (decimal), n = Number of times interest is compounded per year, t = Time in years.
The Rule of 72
A handy shortcut to estimate how long it takes to double your money: divide 72 by the annual interest rate. At 8% per year, your money doubles in roughly 9 years. At 12%, it doubles in about 6 years. This rule works best for rates between 6% and 10%.
Compounding Frequencies Compared
The more frequently interest is compounded, the more you earn. For ₹1,00,000 at 10% for 10 years:
- Annual compounding: ₹2,59,374
- Half-yearly compounding: ₹2,65,330
- Quarterly compounding: ₹2,68,506
- Monthly compounding: ₹2,70,704
How Indian Instruments Compound
- Bank FDs: Typically compounded quarterly
- PPF: Compounded annually at the end of each financial year
- NSC: Compounded annually but paid at maturity
- Recurring Deposits: Compounded quarterly in most banks
- Mutual Funds: NAV-based growth, effectively continuous compounding
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. This ‘interest on interest’ effect causes your money to grow exponentially over time.
What is the Rule of 72?
The Rule of 72 is a quick way to estimate how long it takes to double your money. Divide 72 by the annual interest rate. For example, at 8% per year, your money doubles in approximately 72 ÷ 8 = 9 years.
How does compounding frequency affect returns?
More frequent compounding leads to slightly higher returns. For example, ₹1,00,000 at 10% for 5 years yields ₹1,61,051 with annual compounding, ₹1,62,890 with quarterly, and ₹1,64,531 with monthly compounding.
How do Indian FDs and PPF calculate compound interest?
Most bank FDs compound interest quarterly. PPF compounds annually. Mutual funds don’t technically use compound interest — they grow via NAV appreciation, but the effect is similar to daily compounding.
What is the difference between APR and APY?
APR (Annual Percentage Rate) is the stated interest rate without compounding. APY (Annual Percentage Yield) includes the effect of compounding. APY is always equal to or higher than APR. In India, banks typically quote rates as APR.
Related Resources
Calculators
- Simple Interest — Calculate simple interest on any principal amount. See year-by-year interest accumulation with India's most intuitive SI calculator.
- CAGR — Calculate CAGR on any investment. Find the true annualised return rate for mutual funds, stocks, real estate, or any asset class.
- SIP — Calculate SIP returns with expense ratio impact. See how your monthly investment grows with compounding.
Comparisons
- SIP vs FD — Compare SIP mutual fund returns with Fixed Deposit returns. Data-backed analysis of risk, tax, liquidity, and long-term wealth creation.
Disclaimer
This calculator is for educational purposes only and does not constitute financial advice. Actual interest rates, compounding frequencies, and terms vary by institution. Consult your bank or financial advisor for specific investment or deposit terms.