Compound interest means earning interest on your original amount and on interest added in earlier periods. Use this compound interest calculator to estimate the future value of a one time investment, compare it with simple interest, and view estimated growth year by year.
Enter the amount you plan to invest. Both fields start at zero.
Enter a rate from 0% to 25%. A zero rate is allowed.
Enter a whole number from 1 to 40 years.
This choice controls the mathematical estimate. Actual products may use different rules.
| Year | Interest during year | Balance at year end |
|---|
The calculator assumes a constant annual rate and selected compounding frequency. It excludes taxes, fees, inflation, and changes in actual returns.
This is an illustration, not a promise of returns. Actual interest may be calculated differently depending on the bank, account, investment product, and its terms.
Enter your values to calculate compound interest. All numeric fields start at 0.
What Is Compound Interest?
Compound interest is calculated on the original principal and on interest added in earlier periods. As the balance grows, later interest may be calculated on a larger amount. The effect can become more noticeable over longer periods, depending on the rate, compounding method, and product terms.
Compound Interest Formula
A = P × (1 + r ÷ n)n × t
- A means the estimated final amount.
- P means the starting principal.
- r means the annual interest rate written as a decimal.
- n means the number of compounding periods per year.
- t means the period in years.
Compound interest earned is the estimated final amount minus the original principal. This is a general mathematical model. Actual deposits and investments may use different interest calculation, crediting, or payout rules.
How Compounding Frequency Affects Growth
For the same nominal annual rate, more frequent compounding generally produces a slightly higher result in this formula when the rate is positive and all other assumptions stay the same.
| Frequency | Periods per year | Illustrative amount for ₹1,00,000 at 8% for 10 years |
|---|---|---|
| Annually | 1 | ₹2,15,892 |
| Half yearly | 2 | ₹2,19,112 |
| Quarterly | 4 | ₹2,20,804 |
| Monthly | 12 | ₹2,21,964 |
| Daily | 365 | ₹2,22,511 |
These are mathematical illustrations, not quoted returns for a bank deposit or investment product. Check the product documents for its actual calculation method.
Simple Interest and Compound Interest
Simple interest is calculated only on the original principal. Compound interest is calculated on the principal and previously accumulated interest. For example, ₹10,000 at 10% a year for 10 years produces ₹10,000 in simple interest. With annual compounding at the same rate, the estimated compound interest is about ₹15,937 before taxes and charges.
What Is the Rule of 72?
The Rule of 72 is a quick estimate of how long an investment may take to double at a constant annual compound return. Divide 72 by the annual rate. At 8%, the estimate is about 9 years. At 12%, it is about 6 years. This is a shortcut, not a guarantee or an exact forecast.
Choosing a Rate and Frequency
- Bank deposits: Use the rate and terms published by the bank for your deposit type and tenure.
- Public Provident Fund: Scheme rules determine how interest is calculated and credited, so this calculator may not reproduce the official account calculation exactly.
- Mutual funds: Returns are market linked and can be negative. A fixed compound rate is only an illustration.
- Other investments: Read the product terms before choosing a rate or compounding frequency.
Frequently Asked Questions
Ans. The general formula is A = P × (1 + r ÷ n)n × t. A is the final amount, P is the principal, r is the annual rate as a decimal, n is the number of compounding periods per year, and t is the time in years. Subtract the principal from the final amount to estimate compound interest earned.
Ans. Yes. Enter 0% to calculate a scenario with no interest growth. The estimated final amount will equal the principal when the principal and investment period are valid.
Ans. With a positive nominal annual rate, more frequent compounding adds interest to the balance sooner. In this formula, that generally results in a slightly higher final amount than less frequent compounding at the same nominal rate.
Ans. The difference depends on the principal, rate, time period, and compounding frequency. It generally becomes larger over longer periods when the assumed rate is positive. Use the calculator to compare both estimates.
Ans. No. It applies a constant rate and a selected compounding frequency. Actual product terms, changing market values, interest crediting rules, taxes, and charges may produce a different result.
Ans. No. The result is a nominal estimate before taxes and fees. It does not adjust for inflation or changes in purchasing power.
Ans. It shows estimated interest earned during each year and the balance at the end of that year, using the values entered in the calculator.
Tabassum is a government document researcher and writer with over 5 years of experience exclusively dedicated to tracking and simplifying Central and State Government document processes across India. She has researched and published detailed guides on 100+ government documents and certificates – including Aadhaar Card, PAN Card, Ration Card, Domicile Certificate, and Birth Certificate – covering all states and the Central Government, helping lakhs of Indian citizens successfully complete their paperwork in simple, easy-to-understand language.