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Compound Interest

Compound Interest Calculator

See how compound interest grows your money over time — and exactly how much more you earn compared to simple interest, with any compounding frequency.

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Disclaimer: Results provided by this calculator are for educational and estimation purposes only. They do not constitute formal financial, investment, or tax advice. Actual returns, rates, and tax treatment depend on your specific circumstances and prevailing regulations. Consult a certified financial advisor or chartered accountant before making financial decisions.

How Compound Interest Is Calculated

Compound interest is interest earned on both your original principal and the interest that's already accumulated — "interest on interest." This is what makes long-term investing so powerful: the formula is

A = P × (1 + r/n)n×t

Where P is principal, r is annual rate, n is compounding periods per year, and t is years. Compare this to simple interest (SI = P × r × t), which only ever earns interest on the original principal.

Worked Example

₹50,000 invested at 10% p.a., compounded quarterly, for 10 years: compound amount = ₹1,34,253 (compound interest of ₹84,253). The same principal and rate under simple interest would earn only ₹50,000 in interest — compounding earns you an extra ₹34,253, roughly 68% more, purely from interest-on-interest.

Frequently Asked Questions

Simple interest is calculated only on the original principal every period, so it grows linearly. Compound interest is recalculated on the growing balance (principal + accumulated interest) each period, so it grows exponentially — the longer the time horizon, the bigger the gap between the two.
It matters, but less than tenure and rate do. Moving from yearly to quarterly compounding on a 10% rate over 10 years adds a few thousand rupees on ₹50,000 — meaningful, but the biggest lever by far is simply staying invested longer, since compounding accelerates non-linearly over time.
This is the general-purpose formula behind both. Our dedicated FD Calculator applies it to a one-time bank deposit with standard bank compounding conventions, while our SIP Calculator applies a monthly-contribution version of the same compounding principle to mutual fund investing.
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