What is compound interest?

Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods - essentially, interest on interest.

What is the Rule of 72?

The Rule of 72 estimates how long it takes to double your money: divide 72 by the annual interest rate. At 8% return, money doubles in approximately 9 years.

Which compounding frequency is best?

More frequent compounding means more growth. Daily compounding yields slightly more than monthly, which yields more than annually - though the difference is small.

How is compound interest different from simple interest?

Simple interest is calculated only on the principal. Compound interest is calculated on principal plus accumulated interest, leading to exponential growth over time.

What investments use compound interest?

Fixed deposits, recurring deposits, PPF, mutual funds, and stocks all benefit from compounding. The longer you stay invested, the greater the compounding effect.

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Compound Interest Calculator

See how your money grows with the power of compounding over time.

Principal Amount

₹10,000₹10.00 Cr

Annual Interest Rate

1.0%30.0%

Time Period (Years)

1 yr50 yrs

Compounding Frequency

Maturity Amount

₹2.69 L

Total Interest

₹1.69 L

Effective Rate (CAGR)

10.38%

Compounding advantage vs simple interest

Simple interest maturity₹2.00 L

Compound interest maturity₹2.69 L

Compounding earns ₹68,506 extra over simple interest at the same 10% rate

Year-by-Year Growth

About the Compound Interest Calculator

Compound interest is interest earned not just on your principal, but also on the interest accumulated so far. Albert Einstein reportedly called it the 'eighth wonder of the world.' Unlike simple interest (which is linear), compound interest grows exponentially - making it the foundation of every investment instrument from FDs and PPF to mutual funds and stocks.

Compound Interest Formula

A = P × (1 + r/n)^(n×t)

A = Final amount · P = Principal · r = Annual interest rate (decimal) · n = Times compounded per year · t = Time in years

Worked Example

₹1 lakh invested at 8% compounded quarterly for 10 years

Principal:₹1,00,000

Rate:8% p.a.

Compounding:Quarterly (4×/year)

Duration:10 years

Final amount ≈ ₹2,20,804 · Interest earned ≈ ₹1,20,804 · Effective annual rate ≈ 8.24%

Tips & Insights

1
Use the Rule of 72: divide 72 by the annual rate to find doubling time (72 ÷ 8% = 9 years).
2
More frequent compounding (daily vs annual) gives slightly higher returns - the difference matters over decades.
3
Reinvesting dividends is one of the most powerful forms of compounding in equity investing.
4
Starting ₹1 lakh at age 25 at 10% returns ₹17.5 lakh by age 60 - without adding a single rupee more.
5
Compounding works against you in debt - credit card interest at 36%/year doubles your balance in just 2 years.

Why this matters for you

Every long-term financial decision - whether it's choosing a PPF over RD, or picking an equity fund over an FD - comes down to understanding compounding. The difference between 7% and 12% annual returns over 25 years is not 5% more money - it's nearly 3 times more wealth.