A compound interest calculator shows how money grows when returns are reinvested to generate their own returns.
About this calculator
A compound interest calculator shows how money grows when returns are reinvested to generate their own returns. Unlike simple interest, which only earns on the principal, compound interest earns on both the principal and the interest already added.
Over a long period, compounding can change the result more than most people expect. Even a modest investment can grow a lot over a few decades.
Common uses
- Calculate how much a savings account or FD grows with compound interest
- Compare annual vs quarterly vs monthly compounding
- See why starting investments early makes such a large difference
- Model wealth growth for retirement planning
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest is earned only on the principal: SI = P × r × t. Compound interest is earned on the principal plus accumulated interest: CI = P × (1 + r)^t − P. Over time, compound interest usually outperforms simple interest.
How does compounding frequency affect returns?
More frequent compounding produces higher returns. ₹1 lakh at 12% annual rate compounded annually grows to ₹3.1 lakh in 10 years. Compounded monthly (1% per month), it grows to ₹3.3 lakh. Compounded daily grows even slightly more.