A = P(1 + r/n)^nt

Compound Interest Calculator

Calculate compound interest with any compounding frequency. See how your money grows year by year with the power of compounding.

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Investment Details

₹
₹1K₹10Cr
%
0.1%50%
yr
1 yr50 yr

Compounding Frequency

Quick presets

Total Amount (A)

₹1,61,051

After 10 years at 10% quarterly compounding

Principal (P)

₹1,00,000

Compound Interest

₹61,051

Simple Interest (for ref)

₹1,00,000

CI vs SI Gain

₹0

Amount Breakdown

total ₹1.6L

Principal

₹1,00,000

62.1%

Interest Earned

₹61,051

37.9%

Year-by-Year Growth

How your ₹ grows with compound interest each year

Year Opening Balance Interest Earned Closing Balance

What is Compound Interest?

Compound interest is interest earned on both your principal and the interest already accumulated. Unlike simple interest — which is paid only on the original amount — compounding lets your interest earn its own interest, so the balance snowballs over time.

The longer you stay invested, the more dramatic the effect. This is the engine behind FDs, PPF, mutual funds and SIPs — and, in reverse, behind credit-card and loan debt that grows against you.

Why it matters

₹1 lakh at 10% becomes ₹2 lakh in ~7 years and ₹4 lakh in ~14 years — time, not just the rate, does the heavy lifting.

Compound Interest Formula

A = P × (1 + r/n)^(n×t)
A= Final amount (principal + interest)
P= Principal (initial investment)
r= Annual interest rate (as decimal, e.g. 10% = 0.10)
n= Compounding frequency per year (1=annual, 4=quarterly, 12=monthly, 365=daily)
t= Time in years

Example

₹1,00,000 at 10% quarterly for 10 years:
A = 1,00,000 × (1 + 0.10/4)^(4×10) = ₹2,68,506

How Compounding Frequency Changes Returns

The more often interest is added, the more you earn. Here is ₹1,00,000 at 10% over 10 years at different frequencies:

Annually (n=1) ₹2,59,374
Quarterly (n=4) ₹2,68,506
Monthly (n=12) ₹2,70,704
Daily (n=365) ₹2,71,791

Most Indian bank FDs compound quarterly.

Compound Interest Examples

₹50,000 · 8% · 5yr · Annual ₹73,466
Interest ₹23,466
₹5,00,000 · 7% · 5yr · Quarterly ₹7,07,389
Interest ₹2,07,389
₹2,00,000 · 12% · 15yr · Annual ₹10,94,714
Interest ₹8,94,714
The power of time
₹1,00,000 at 10% annual: ₹2.59L in 10 yrs, but ₹6.73L in 20 yrs — double the time, far more than double the money.

Compound vs Simple Interest — ₹1L at 10%

Simple interest stays flat each year; compound interest pulls ahead and keeps accelerating:

After Simple Compound
1 year₹1,10,000₹1,10,000
5 years₹1,50,000₹1,61,051
10 years₹2,00,000₹2,59,374
20 years₹3,00,000₹6,72,750

Compare with our Simple Interest Calculator.

Rule of 72 — Quick Doubling Time

The Rule of 72 is a quick formula to estimate how long it takes to double your money:

Doubling Time = 72 ÷ Interest Rate (%)
6.5% (FD) ≈ 11.1 years
7.1% (PPF) ≈ 10.1 years
10% (Equity) ≈ 7.2 years
12% (MF) ≈ 6 years

Frequently Asked Questions

Common questions about compound interest

What is compound interest in simple words?
Compound interest means earning interest on your interest. If you invest ₹1,000 at 10% p.a., after year 1 you earn ₹100 (total ₹1,100). In year 2, you earn 10% on ₹1,100 = ₹110 — not ₹100. Einstein reportedly called it the "eighth wonder of the world."
How does compounding frequency affect returns?
More frequent compounding = more returns, but the difference is small at typical rates. For ₹1L at 10% for 10 years: Annual compounding → ₹2,59,374; Quarterly → ₹2,68,506; Monthly → ₹2,70,704; Daily → ₹2,71,791. Most Indian bank FDs use quarterly compounding.
What is the effective annual rate (EAR)?
The Effective Annual Rate (EAR) is the actual annual rate after accounting for compounding: EAR = (1 + r/n)^n − 1. Example: 10% nominal rate compounded monthly → EAR = (1 + 0.10/12)^12 − 1 = 10.47%. This is why FDs at 7% quarterly can advertise slightly higher effective yields.
How do mutual funds use compounding?
In growth mutual funds, returns are automatically reinvested — so the fund compounds continuously. This is why staying invested for 15–20+ years in equity funds can turn modest SIP amounts into large corpus. For example, ₹10,000/month for 20 years at 12% CAGR = ₹98+ lakh, vs ₹24 lakh invested.
What is the Rule of 72?
The Rule of 72 is a shortcut to estimate how long money takes to double under compounding: divide 72 by the annual rate. At 8% your money doubles in about 9 years (72 ÷ 8); at 12% in about 6 years. It's a quick mental check, accurate for rates roughly between 6% and 15%.
Does compound interest work against me on loans?
Yes — credit cards and many loans compound interest against you. Credit cards compound monthly at 36–48% a year, so unpaid balances balloon fast. The same force that grows your investments grows your debt, which is why clearing high-interest debt early is so valuable.
How do I get the most out of compounding?
Start as early as possible, stay invested without withdrawing, reinvest all interest/dividends, and avoid breaking the corpus. Time is the biggest lever — a 25-year-old investing modestly often ends up ahead of a 35-year-old investing far more, purely because of extra years of compounding.
What is the difference between simple and compound interest?
Simple interest is calculated only on the principal. Compound interest is calculated on the principal plus accumulated interest, so interest earns interest. For ₹1,00,000 at 10% for 5 years: SI = ₹50,000; CI (annual) = ₹61,051. The gap grows over time — see our Simple Interest Calculator.

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