Compound Interest Calculator
Calculate how your money grows with the power of compounding.
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What is Compound Interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. It is often called "interest on interest" and can significantly grow your money over time.
Formula
A = P × (1 + r/n)^(n×t)
- A = Final amount (maturity value)
- P = Principal amount
- r = Annual interest rate (as decimal)
- n = Number of times interest compounds per year
- t = Time in years
Compound Interest vs Simple Interest
- Simple Interest: Interest only on principal (P × r × t)
- Compound Interest: Interest on principal + accumulated interest
- Compound interest gives higher returns over long periods
Example
₹1,00,000 at 8% for 10 years:
- Simple Interest: ₹1,80,000 (interest: ₹80,000)
- Compound Interest (yearly): ₹2,15,892 (interest: ₹1,15,892)
- Difference: ₹35,892 more with compounding
Where is Compound Interest Used?
- Fixed Deposits (FD)
- Recurring Deposits (RD)
- Public Provident Fund (PPF)
- Mutual Funds (SIP, Lumpsum)
- National Pension System (NPS)
- Savings Account interest
Important Note
The more frequently interest is compounded, the higher the final amount. Daily compounding gives the highest returns, followed by monthly, quarterly, half-yearly, and yearly.