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Compound Interest Calculator

Compound interest is interest that earns interest. This shows how an amount grows over time, and how much difference the compounding frequency actually makes — which is usually less than people expect beyond monthly.

Check the working

A worked example

A fixed case, for reference.

Take ₹1,00,000 at 10% a year for 5 years, compounded quarterly.

  1. Rate per period

    rn=0.104=0.025\frac{r}{n} = \frac{0.10}{4} = 0.025

  2. Number of periods

    nt=4×5=20n t = 4 \times 5 = 20

  3. Compound the growth factor

    (1.025)20=1.6386164(1.025)^{20} = 1.6386164

  4. Apply it to the principal

    1,00,000×1.6386164=1,63,861.641{,}00{,}000 \times 1.6386164 = 1{,}63{,}861.64

The same ₹1,00,000 at 10% compounded yearly would reach ₹1,61,051. Quarterly compounding adds ₹2,810 over five years — real, but far smaller than the jump from a higher rate would give.

The formula

A=P(1+rn)ntA = P \left(1 + \frac{r}{n}\right)^{n t}

The standard compound interest formula.

Effective rate=(1+rn)n−1\text{Effective rate} = \left(1 + \frac{r}{n}\right)^{n} - 1

What the nominal rate actually amounts to over one year, once compounding is counted.

What each symbol means

A
the amount at maturity
P
the principal invested at the start
r
the nominal annual rate, as a decimal
n
compounding periods per year
t
the number of years

What this assumes, and where it stops

Assumptions

  • The rate stays fixed for the entire period.
  • Interest is added to the balance at the end of each compounding period and immediately starts earning.
  • Nothing is withdrawn along the way.
  • A year is treated as having exactly the stated number of equal periods; daily compounding uses 365 days.

Limitations

  • Tax is not deducted. Interest income from deposits is generally taxable each year, which materially reduces the compounding effect for most investors.
  • Real-world instruments often pay interest out rather than reinvesting it, in which case no compounding occurs at all.
  • The model uses a single fixed rate, whereas floating-rate products change over time.
  • This is a projection from a fixed assumption, not a forecast. Returns vary year to year and can be negative for long stretches.

What this calculator does

  • Projects the maturity value of a principal at a given rate, over a given period.
  • Lets you change how often interest is compounded, from yearly to daily.
  • Reports the effective annual rate, which is what a nominal rate really works out to.

Common questions

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