Compound Interest Calculator
The compound interest calculator shows how your money grows when interest is earned on both the principal and previously accumulated interest. Choose different compounding frequencies to see how they affect your returns.
- Principal
- Maturity Value
| Year | Principal | Interest Earned | Total Value |
|---|---|---|---|
| 1 | ₹1,00,000 | ₹8,243 | ₹1,08,243 |
| 2 | ₹1,00,000 | ₹17,166 | ₹1,17,166 |
| 3 | ₹1,00,000 | ₹26,824 | ₹1,26,824 |
| 4 | ₹1,00,000 | ₹37,279 | ₹1,37,279 |
| 5 | ₹1,00,000 | ₹48,595 | ₹1,48,595 |
| 6 | ₹1,00,000 | ₹60,844 | ₹1,60,844 |
| 7 | ₹1,00,000 | ₹74,102 | ₹1,74,102 |
| 8 | ₹1,00,000 | ₹88,454 | ₹1,88,454 |
| 9 | ₹1,00,000 | ₹1,03,989 | ₹2,03,989 |
| 10 | ₹1,00,000 | ₹1,20,804 | ₹2,20,804 |
What Your Results Mean
The maturity value is what you'll receive at the end of the investment period. The total interest earned is the difference between the maturity value and your principal. Compare this with simple interest to see how compounding accelerates your growth — the longer the period, the bigger the gap.
What This Calculator Does
Enter your principal amount, annual interest rate, investment period, and compounding frequency (monthly, quarterly, half-yearly, or yearly). The calculator projects the maturity value and total interest earned.
How the Calculation Works
Unlike simple interest, compound interest calculates interest on the accumulated balance. More frequent compounding means interest is calculated and added more often, resulting in slightly higher returns.
Calculation Logic (Simplified)
A = P × (1 + r/n)^(n×t), where P = principal, r = annual rate, n = compounding frequency per year, t = years. Interest = A - P.Example Calculation
₹1,00,000 at 8% for 5 years: Simple interest = ₹40,000. Compound interest (quarterly) = ₹48,595.
When to Use This Calculator
- You're comparing fixed deposits with different compounding frequencies
- You want to understand the actual difference between simple and compound interest
- You're evaluating PPF, EPF, or recurring deposit returns
- You need to project maturity values for debt instruments or savings schemes
Common Mistakes to Avoid
- Assuming all investments compound at the same frequency — FDs are typically quarterly, PPF is annual
- Overestimating the benefit of daily vs monthly compounding for typical interest rates — the difference is marginal
- Not comparing the effective annual rate when switching between different compounding frequencies
- Forgetting to account for TDS on interest income from fixed deposits
Benefits & Use Cases
- Compare compounding frequencies side by side
- Understand the real impact of compounding
- Plan fixed deposit and bond investments
- See the difference between simple and compound interest
Related Calculators
Assumptions and Limitations
Assumptions
- The principal is invested at the start and no additional deposits are made
- Interest is compounded at the chosen frequency throughout the entire period
- The interest rate remains constant for the full duration
- No taxes or charges are deducted from the accumulated interest
Limitations
- Most real-world instruments have specific compounding rules that may differ from the calculator's options
- TDS on interest income (for FDs above ₹40,000/year) is not factored in
- Premature withdrawal penalties for FDs are not accounted for
- Inflation impact on the real value of interest earned is not shown
Frequently Asked Questions
What to Do Next
Now that you have your results, explore related tools to refine your financial plan. Try comparing different scenarios or use our other calculators for a more complete picture.
Disclaimer: These calculations are for educational and planning purposes only. Actual investment returns vary based on market conditions, product choice, fees, taxes, and individual circumstances. This tool does not constitute financial advice. Consider consulting a qualified financial advisor for decisions specific to your situation.