Compound Interest Calculator
A compound interest calculator is a free online tool that shows how your investment grows when interest is reinvested — the most powerful force in personal finance.
Add monthly SIP-style deposits on top of your principal.
Compound vs Simple Interest
Year-wise Growth
| Year | Value | Interest |
|---|---|---|
| Year 1 | ₹1,08,000 | ₹8,000 |
| Year 2 | ₹1,16,640 | ₹16,640 |
| Year 3 | ₹1,25,971 | ₹25,971 |
| Year 4 | ₹1,36,049 | ₹36,049 |
| Year 5 | ₹1,46,933 | ₹46,933 |
| Year 6 | ₹1,58,687 | ₹58,687 |
| Year 7 | ₹1,71,382 | ₹71,382 |
| Year 8 | ₹1,85,093 | ₹85,093 |
| Year 9 | ₹1,99,900 | ₹99,900 |
| Year 10 | ₹2,15,892 | ₹1,15,892 |
Estimates only. Actual returns depend on market conditions or bank terms.
How to use Compound Interest Calculator
- Enter principal — Type your starting investment amount.
- Set interest rate — Enter the annual rate (return rate).
- Choose frequency — Daily, monthly, quarterly, half-yearly, or yearly.
- See growth — View maturity value and year-wise compounding.
Key features
- Daily, monthly, quarterly, half-yearly, yearly options
- Year-wise growth table
- Simple vs compound comparison
- Effective annual rate (EAR)
- Interest breakdown
- Works for investments and loans
What is Compound Interest?
Compound interest is interest calculated on the initial principal plus all previously accumulated interest. Albert Einstein reportedly called it 'the eighth wonder of the world.' A ₹1 lakh investment at 8% compounded yearly for 30 years grows to over ₹10 lakh — 10x. The same amount with simple interest only reaches ₹3.4 lakh. Compounding is why starting early matters more than investing more later.
The Compounding Formula
A = P(1 + r/n)^(n×t). Where A is final amount, P is principal, r is annual rate (as decimal), n is compounding frequency per year, and t is years. The magic is in the exponent (n×t) — time is the biggest multiplier. Small changes in rate or frequency have surprisingly large effects over decades.
Compounding Frequency Matters
₹1 lakh at 8% for 10 years: Yearly = ₹2.16 lakh. Half-yearly = ₹2.19 lakh. Quarterly = ₹2.21 lakh. Monthly = ₹2.22 lakh. Daily = ₹2.23 lakh. The difference seems small, but over 30 years: Yearly = ₹10.06 lakh vs Daily = ₹10.99 lakh — nearly ₹1 lakh more. Always prefer higher compounding frequency when available.
Compounding Works Against You Too
Compound interest is amazing for investments but brutal for debt. A credit card charging 42% annually on a ₹1 lakh balance grows to ₹4.3 lakh in 4 years if unpaid. This is why paying off high-interest debt is the highest-return investment you can make. Compound interest is a double-edged sword — you can be on either side of it.
Pro tips
- Start investing as early as possible — time beats amount
- Reinvest all dividends and interest for maximum growth
- The Rule of 72: Years to double = 72 ÷ interest rate
- Compound interest on debt is dangerous — clear high-rate loans first
Common use cases
- Investment growth projections
- Retirement planning
- Understanding loan cost
- Credit card debt calculations
- SIP and mutual fund returns
Frequently asked questions
What is compound interest?+
Compound interest is interest earned on both principal and previously accumulated interest. It grows faster than simple interest over time.
What's the formula?+
A = P(1 + r/n)^(n×t) where P is principal, r is annual rate, n is compounding frequency, t is years.
Which compounding is best?+
More frequent compounding = higher returns. Daily > Monthly > Quarterly > Yearly.
How does compound interest compare to simple interest?+
Compound earns interest on interest. Over 10 years at 8%, compound beats simple by 40%+.
Is this for investments or loans?+
Both. Same formula — great for understanding both sides of finance.
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