Compound Interest
Key takeaways
- ₹1.00 L compounded quarterly at 7% grows to ₹1.41 L in 5 years — ₹41,478 of interest.
- The same rate as simple interest would earn ₹35,000; compounding adds ₹6,478 more.
- Compounded annually instead, the maturity would be ₹1.40 L — ₹1,223 less than quarterly.
Yearly schedule
| Year | Invested | Interest | Balance |
|---|---|---|---|
| 1 | ₹1.00 L | ₹7,186 | ₹1.07 L |
| 2 | ₹0 | ₹7,702 | ₹1.15 L |
| 3 | ₹0 | ₹8,256 | ₹1.23 L |
| 4 | ₹0 | ₹8,849 | ₹1.32 L |
| 5 | ₹0 | ₹9,485 | ₹1.41 L |
About the Compound Interest
Compound interest is interest earned on both your principal and the interest already added — so your money grows faster the longer it stays invested and the more often it compounds. It is the engine behind most long-term saving.
This calculator grows a principal at your chosen rate and compounding frequency (annual, quarterly, monthly or daily) and shows the maturity amount and total interest.
Frequently asked questions
How is compound interest calculated?
Future Value = Principal × (1 + r ÷ (100 × n)) ^ (n × years), where r is the annual rate and n is how many times a year it compounds. The total interest is the future value minus the principal.
What is the difference between simple and compound interest?
Simple interest is charged only on the original principal, so it grows in a straight line. Compound interest is charged on the principal plus accumulated interest, so it grows faster over time. Our Simple Interest calculator shows the contrast.
Does more frequent compounding earn more?
Yes, but with diminishing returns. Daily compounding earns a little more than monthly, which earns more than annual — but the gap narrows as frequency rises, approaching a mathematical limit.
What is the rule of 72?
A quick way to estimate how long money takes to double: divide 72 by the annual return. At 8%, money doubles in roughly 9 years. It is an approximation, handy for a fast mental check.
Where does compound interest apply?
To FDs, RDs, PPF, savings accounts and most investments where returns are reinvested. It also works against you on loans and credit-card balances, where unpaid interest compounds.
Disclaimer: This calculator is for information and education only. It is not investment advice and not a recommendation. Where a rate or a price is an input, it is an assumption, and actual rates vary. It does not take your personal circumstances into account. Every figure is computed solely by applying the formula and assumptions stated on this page to the inputs you entered.