Calculators

Compound Interest Calculator

See a lump sum and regular additions grow with interest on interest, compounded yearly, quarterly, monthly, daily or continuously.

How it works

Each period, interest is added to the balance and then earns interest itself. The more often that happens, the higher the effective yearly rate, though the gains shrink quickly: continuous compounding, the limit, is P × e^(r·t). Monthly additions are grown the same way from the month they go in.

A = P × (1 + r/n)^(n·t)
P
Starting amount
r
Annual interest rate as a decimal
n
Compounding periods a year: 1, 2, 4, 12 or 365
t
Years

Worked example

₹1,00,000 at 8% a year, compounded quarterly, left for 10 years.

  1. 1Rate per quarter: 8% ÷ 4 = 2%
  2. 2Quarters: 10 × 4 = 40
  3. 3Growth: 1.02⁴⁰ = 2.20804
  4. 4Effective yearly rate: 1.02⁴ − 1 = 8.243%

The deposit grows to ₹2,20,804, of which ₹1,20,804 is interest.

Frequently asked questions

What is the difference between simple and compound interest?

Simple interest is paid only on the original amount, so ₹1 lakh at 8% earns ₹8,000 every year. Compound interest is also paid on interest already earned, so the yearly amount keeps rising. Over 10 years that is ₹80,000 simple against ₹1,20,804 compounded quarterly.

How long does it take to double my money?

Divide 72 by the interest rate. At 8%, money doubles in about 9 years; at 12%, about 6. The calculator shows the exact figure, which the rule of 72 approximates well between about 6% and 10%.

Does compounding frequency matter much?

Less than people expect. At 8%, going from yearly to quarterly compounding lifts the effective rate from 8% to 8.24%. Going from monthly to daily adds only about 0.03% more. The rate and the time invested matter far more.

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