Compound Interest Calculator
Compute compound interest growth with monthly, quarterly or yearly compounding.
Formula: A = P × (1 + r/n)n·t, where P = principal, r = annual rate, n = compounding frequency, t = years.
Compound Interest Calculator with flexible compounding
Compound interest is the force behind long-term wealth. Albert Einstein reportedly called it “the most powerful force in the universe” — whether or not he did, the math is striking. This calculator shows the final value of a lump sum invested at a given rate, compounded at your chosen frequency.
The formula
A = P × (1 + r/n)^(n·t)
- A = final amount
- P = principal (initial investment)
- r = annual interest rate (as a decimal)
- n = number of times per year interest compounds
- t = number of years
Worked example
₹1,00,000 at 8% for 20 years:
| Compounding | Final amount |
|---|---|
| Annually (n=1) | ₹4,66,096 |
| Half-yearly (n=2) | ₹4,80,102 |
| Quarterly (n=4) | ₹4,87,544 |
| Monthly (n=12) | ₹4,92,680 |
| Daily (n=365) | ₹4,95,216 |
Daily vs. annual is a 6% difference in total growth — meaningful but not enormous.
Why starting early matters
Two people save ₹1 lakh per year at 10%:
- Starts at 25, stops at 35 (10 years, ₹10 lakh total contributed)
- Starts at 35, stops at 65 (30 years, ₹30 lakh total contributed)
By age 65, the person who started early has more money — despite contributing ₹20 lakh less. That’s the compounding curve in action.
When to use this calculator
- Fixed deposits — see the end value at maturity.
- Recurring deposits — for a single lump sum only; for monthly contributions use the SIP Calculator.
- EPF / PPF projections — both use annual compounding.
- Debt mutual funds — approximate growth at a stable assumed return.
Frequently asked questions
- What is the difference between simple and compound interest?
- Simple interest is calculated only on the original principal. Compound interest is calculated on principal plus previously accumulated interest — which means the growth accelerates over time. Most real-world investments (mutual funds, stocks, FDs) use compound interest.
- Why does compounding frequency matter?
- More frequent compounding means interest is added to principal more often, so subsequent interest calculations are on a larger base. The effect is real but modest: at 10% annual, yearly compounding gives 10% actual, while daily compounding gives ~10.52%. The difference grows with higher rates.
- Should I pick monthly or annual compounding for a mutual fund?
- Mutual fund NAVs change daily, so conceptually the returns compound continuously. For planning, monthly is a close-enough approximation and matches the frequency of SIP contributions.
Related tools
SIP Calculator
Calculate returns on your Systematic Investment Plan with maturity value and wealth gained.
SWP Calculator
Plan a Systematic Withdrawal Plan — see corpus depletion, monthly income and balance.
Investment Return (ROI) Calculator
Calculate ROI, annualized return and profit on any investment.