Compound Interest Calculator
Project growth with flexible compounding frequency.
Principal Amount
Annual Interest Rate
Time Period
Compounding Frequency
Maturity
₹2,20,804
Maturity Amount
₹2,20,804
Principal
₹1,00,000
Total Interest Earned
₹1,20,804
How this calculator works
Compound interest uses A = P(1 + r/n)^(nt), where P is your principal, r is the annual rate, n is how many times per year interest compounds, and t is the number of years. Unlike simple interest, each compounding period earns interest on the interest already accumulated, not just the original principal — which is why the growth curve accelerates over time instead of staying a straight line.
How much does compounding frequency actually matter?
₹1,00,000 at 8% for 10 years grows to ₹2,15,892 with annual compounding, ₹2,21,964 with monthly compounding, and ₹2,22,535 with daily compounding — monthly versus annual is worth about ₹6,072 on this example, while monthly versus daily only adds another ₹571. Compounding more often always helps, but the gains shrink quickly past monthly, which is why the difference between monthly and daily compounding rarely matters much in practice.
Why compounding accelerates over time
In the early years, most of your balance is still the original principal, so the interest earned each period looks similar to simple interest. As accumulated interest becomes a larger share of the total balance, more and more of each period's interest is being earned on previously earned interest rather than the original principal — which is why compound growth looks deceptively slow at first and much faster in the later years of a long time horizon.
Compound vs. simple interest
If you're comparing this against a simple-interest instrument (no compounding at all), see the Simple Interest Calculator — the gap between the two grows larger the longer the time horizon, since simple interest never benefits from interest-on-interest at all.
Frequently Asked Questions
What's the formula for compound interest?
A = P(1 + r/n)^(nt), where P is the principal, r is the annual interest rate, n is how many times per year interest compounds, and t is the number of years. This calculator lets you adjust the compounding frequency to see its effect.
Does compounding frequency really make a big difference?
It has a real but usually modest effect compared to the interest rate and time horizon — monthly compounding grows faster than annual compounding at the same nominal rate, but the difference compounds meaningfully only over long periods or high rates.
How is compound interest different from simple interest?
Simple interest is calculated only on the original principal for the entire term. Compound interest is calculated on the principal plus any interest already earned, so the growth accelerates over time rather than staying linear.
Is daily compounding much better than monthly?
Not really — on ₹1,00,000 at 8% for 10 years, monthly compounding beats annual by about ₹6,072, but daily only adds a further ₹571 over monthly. Gains from more frequent compounding shrink quickly past monthly, so the difference rarely matters much in practice.
Why does compound growth look slow at first?
Early on, most of your balance is still the original principal, so growth looks similar to simple interest. As accumulated interest becomes a larger share of the balance, more of each period's interest is earned on previous interest rather than the principal — which is why the growth curve visibly accelerates in later years.
This tool provides general estimates for informational purposes only and isn't financial or tax advice. Consult a qualified financial advisor or tax professional before making financial decisions.