Compound Interest Calculator
Calculate compound interest for any principal, rate, and time period. Compare daily, monthly, quarterly, and annual compounding. See how Rs 1 lakh grows at different frequencies.
Compound Interest Calculator
Results update instantly
Enter your initial investment or principal amount
Annual interest or return rate — FD: 7%, equity: 12-15%
Estimates based on constant rate assumption. Actual returns may vary.
| Year | Invested | Returns | Total Value |
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Albert Einstein reportedly called compound interest the eighth wonder of the world. Rs 1 lakh at 12% compounded monthly for 30 years = Rs 35.9 lakh. The same at annual compounding = Rs 29.9 lakh. Monthly compounding creates Rs 6 lakh extra on the same principal — just from frequency.
What is a Compound Interest Calculator?
A compound interest calculator shows how money grows when interest earns interest — the principle behind all long-term wealth building. Unlike simple interest where you earn interest only on the principal, compound interest adds earned interest back to the principal, creating an exponentially growing base.
Compound interest formula
A = Final amount P = Principal r = Annual rate/100 n = Compounding frequency per year t = Years
Interest = A - P
Effective annual rate (EAR)
The effective annual rate accounts for compounding frequency: EAR = (1 + r/n)^n - 1. A 10% nominal rate gives: Annual EAR = 10.00%, Quarterly EAR = 10.38%, Monthly EAR = 10.47%, Daily EAR = 10.52%. Banks advertising monthly compounding on FDs give marginally higher effective yields than the stated rate.
The power of time in compounding
The most important variable in compound interest is time — not the rate. Rs 1L at 12% for 10 years = Rs 3.1L. For 20 years = Rs 9.6L. For 30 years = Rs 29.9L. Each additional decade more than triples the corpus. This is why starting to invest at 25 vs 35 makes a profound difference — not just 10 more years of returns, but 10 more years of exponential acceleration.
ThriftRupee tips on compounding
Tip 1: Reinvest dividends and interest. The compounding calculation assumes all returns are reinvested. Spending FD interest or mutual fund dividends breaks the compound growth chain. Choose cumulative FD options and growth plans in mutual funds over dividend payouts.
Tip 2: Avoid breaking investments prematurely. Withdrawing from a long-term investment in year 8 of a planned 15-year investment doesn't just lose 7 years of returns — it loses the exponentially growing final years where most compounding occurs.
Tip 3: Apply compounding to debt reduction too. Compound interest works against you on loans. Prepaying a loan in year 2 vs year 10 saves exponentially more because the early years' interest is compounding into a growing balance that you're eliminating.