📈 Compound Interest Calculator

The Power of Compound Interest

Compound interest is interest calculated on both your original principal and the interest that has already accumulated. Often called "interest on interest", it is the engine behind long-term wealth — the earlier and longer you invest, the more dramatic the growth. Most savings products, FDs and mutual funds use compounding.

The formula is A = P × (1 + r/n)^(n×t), where P is the principal, r is the annual rate, n is how many times per year interest compounds, and t is the number of years. The interest earned is simply A minus P. More frequent compounding (monthly vs yearly) produces a slightly higher final amount.

For example, ₹1,00,000 at 10% compounded annually for 10 years grows to about ₹2,59,374 — more than ₹59,000 extra compared with simple interest over the same period. Extend it to 20 years and the amount balloons to over ₹6.7 lakh, showing why time is the most valuable ingredient in investing.

Key points to remember

• The earlier you start, the more compounding works in your favour.
• More frequent compounding yields slightly higher returns.
• Reinvesting your interest keeps the compounding going.

Frequently asked questions

Because you earn returns on your past returns, growth accelerates over time — especially over long horizons.

Yes. Monthly compounding earns a little more than annual compounding at the same rate.