Compound Interest Calculator

📈 Compound Interest Calculator

See how your money grows when interest earns interest, year after year

A Compound Interest of ₹1,00,000 for 10 years at 8% grows to ₹2.16 L.

₹2,15,892

₹2,15,892 maturity amount from ₹1.00 L

Principal Amount₹1,00,000

Annual Interest Rate8%

Time Period10 yr

Compounding Frequency

Total Interest

₹1,15,892

Principal

₹1,00,000

Effective Annual Rate

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Formula

A = P × (1 + r ÷ n)^(n × t), where P = principal, r = annual rate, n = compounding frequency per year, t = years

Worked example

Input	Value
Principal Amount	₹1,00,000
Annual Interest Rate	8%
Time Period	10 yr
Compounding Frequency	Annual
Maturity Amount	₹2,15,892
Total Interest	₹1,15,892
Principal	₹1,00,000
Effective Annual Rate	8%

The one formula behind all wealth

Compound interest means interest earning interest: each period’s growth is added to the principal, and the next period grows on the larger base. The curve starts deceptively flat and ends absurdly steep — which is exactly why human intuition (linear) consistently underestimates it.

A = P × (1 + r/n)^(n×t)

P = principal, r = annual rate, n = compounding frequency per year, t = years. More frequent compounding (higher n) nudges the outcome up; more TIME (higher t) transforms it.

Example₹1 lakh at 10%: simple interest gives ₹10,000 every year — ₹3 lakh total after 20 years. Compounded, the same deal reaches ₹6.7 lakh, and after 30 years ₹17.4 lakh vs simple’s ₹4 lakh. The gap between the two IS the interest-on-interest — tiny in year 2, dominant by year 20. Rule of 72 shortcut: money doubles every 72 ÷ rate years.

Common mistakeInterrupting the compounding to “use” the gains — withdrawing interest, booking profits into idle cash, pausing between goals. Every withdrawal resets part of the curve to its flat beginning. The stereotype of compounding rewarding the patient is not a moral — it’s the arithmetic of the exponent.

✓ You learnedCompounding = growth on growth: flat early, explosive late, doubling every 72 ÷ rate years. Time in the curve beats rate-chasing — start early, reinvest everything, and let the exponent do the heavy lifting.

FAQs

Does compounding frequency (monthly vs yearly) matter much?

Less than people hope: ₹1 lakh at 8% for 10 years is ₹2.159 lakh compounded annually vs ₹2.22 lakh monthly — a ~3% difference. The variables that actually move outcomes are rate and, above all, time. Frequency is a tiebreaker between similar products, not a strategy.