Compound Interest Calculator
Calculate compound interest with flexible compounding
What is a Compound Interest Calculator?
Compound interest is the engine behind all wealth creation — it's interest earning interest, creating exponential growth over time. Unlike simple interest where you earn only on the original principal, compound interest reinvests your earnings so they generate their own returns. This calculator lets you model compound interest with flexible compounding frequencies (monthly, quarterly, half-yearly, yearly).
The difference between compounding frequencies matters more than most people realize. Monthly compounding on a fixed deposit gives you slightly more than yearly compounding at the same stated rate. For large amounts over long periods, this difference adds up to lakhs.
When to Use This Calculator
- Calculating maturity value of a fixed deposit with quarterly compounding
- Understanding how much ₹1 lakh grows to in 10, 20, 30 years at different rates
- Comparing returns across different compounding frequencies (monthly vs yearly)
- Teaching yourself or others the power-of-compounding concept with real numbers
- Projecting the growth of any lump-sum investment or savings
Key Terms
Frequently Asked Questions
How does compounding frequency affect returns?+
More frequent compounding gives higher returns. For ₹10 lakh at 8% for 10 years: yearly compounding gives ₹21.59L, quarterly gives ₹21.91L, and monthly gives ₹22.20L. The difference is modest for FDs but meaningful for large amounts over long periods.
What's the difference between compound and simple interest?+
Simple interest on ₹1 lakh at 10% for 10 years = ₹1 lakh interest. Compound interest (yearly) on the same = ₹1.59 lakh interest. Over 20 years, the gap widens dramatically: ₹2L simple vs ₹5.73L compound. Compounding accelerates over time.
How long does it take to double my money?+
Use the Rule of 72: divide 72 by the annual interest rate. At 6% (FD), money doubles in 12 years. At 8%, in 9 years. At 12% (equity), in 6 years. At 15%, in about 4.8 years.
Do Indian FDs use compound interest?+
Yes, most Indian bank FDs use quarterly compounding. Post office schemes like NSC use annual compounding. Recurring deposits typically use quarterly compounding. Always check the specific scheme's compounding frequency.