Compound Interest Calculator
Compound interest is interest earned on both your original money and on the interest already added. This calculator shows how much a lump sum grows over time and how much difference the compounding frequency makes.
Results
Final amount
₹2,21,964.02
- Interest earned
- ₹1,21,964.02
- Initial amount
- ₹1,00,000
- Effective annual rate
- 8.3%
- What the rate is worth after compounding
₹1,00,000 compounded monthly at 8% for 10 years grows to ₹2,21,964.02, earning ₹1,21,964.02 in interest.
Growth over time
- Principal
- Interest earned
Growth by year (10 rows)
| Period | Interest so far | Balance |
|---|---|---|
| Year 1 | ₹8,299.95 | ₹1,08,299.95 |
| Year 2 | ₹17,288.79 | ₹1,17,288.79 |
| Year 3 | ₹27,023.71 | ₹1,27,023.71 |
| Year 4 | ₹37,566.61 | ₹1,37,566.61 |
| Year 5 | ₹48,984.57 | ₹1,48,984.57 |
| Year 6 | ₹61,350.22 | ₹1,61,350.22 |
| Year 7 | ₹74,742.21 | ₹1,74,742.21 |
| Year 8 | ₹89,245.72 | ₹1,89,245.72 |
| Year 9 | ₹1,04,953.02 | ₹2,04,953.02 |
| Year 10 | ₹1,21,964.02 | ₹2,21,964.02 |
Show the calculation steps
- Periodic rate = 8% ÷ 12 = 0.66667% per period.
- Number of compounding periods = 12 × 10 years = 120.
- A = P × (1 + r/n)^(n × t) = ₹1,00,000 × (1 + 0.0066667)^120 = ₹2,21,964.02.
- Interest earned = A − P = ₹2,21,964.02 − ₹1,00,000 = ₹1,21,964.02.
- Effective annual rate = (1 + r/n)^n − 1 = 8.3%.
What is compound interest?
Each time interest is added to your balance, the next period's interest is calculated on the larger amount. Over many years this snowball effect makes growth accelerate, which is why starting early matters so much for savings and why debt with compounding interest can grow quickly.
How the calculation works
The annual rate is divided by the number of compounding periods per year, and the balance is multiplied by one plus that periodic rate for every period in the time frame. The calculator evaluates this in a numerically stable way, so very small rates and long periods stay accurate.
The effective annual rate shows what the nominal rate is really worth after compounding. Compounding more often gives a slightly higher effective rate.
What changes the result most?
Three factors drive the final amount:
- Time: because growth is exponential, the later years add far more than the early ones.
- Rate: a higher rate raises the growth per period and the effect is amplified by compounding.
- Frequency: more frequent compounding helps, but the gain from monthly to daily is small compared with the effect of rate and time.
Formula
A = P × (1 + r ÷ n)^(n × t)
Interest = A − P
Effective annual rate = (1 + r ÷ n)^n − 1
Where:
- A
- = Final amount
- P
- = Initial amount (principal)
- r
- = Annual interest rate as a decimal (8% = 0.08)
- n
- = Compounding periods per year
- t
- = Time in years
Example calculation
₹1,00,000 at 8% compounded monthly for 10 years
Inputs
- Initial Amount
- ₹1,00,000
- Annual Interest Rate
- 8 %
- Time Period
- 10 years
- Compounding Frequency
- Monthly (12× a year)
Result
- Final amount
- ₹2,21,964.02
- Interest earned
- ₹1,21,964.02
- Initial amount
- ₹1,00,000
- Effective annual rate
- 8.3%
Step-by-step
- Periodic rate = 8% ÷ 12 = 0.66667% per period.
- Number of compounding periods = 12 × 10 years = 120.
- A = P × (1 + r/n)^(n × t) = ₹1,00,000 × (1 + 0.0066667)^120 = ₹2,21,964.02.
- Interest earned = A − P = ₹2,21,964.02 − ₹1,00,000 = ₹1,21,964.02.
- Effective annual rate = (1 + r/n)^n − 1 = 8.3%.
Important notes
- The calculation assumes a constant rate and no deposits or withdrawals after the initial amount. Use the SIP calculator for regular investments.
- Taxes, fees and inflation are not included, so the real value of your money will be lower than the figure shown.
Disclaimer: This calculator provides estimates for informational purposes and should not be considered financial advice. Actual figures from lenders, banks and investment products can differ because of fees, taxes, rounding rules and changing rates. Consult a qualified professional before making financial decisions.
Frequently asked questions
What is the compound interest formula?
A = P × (1 + r ÷ n)^(n × t), where P is the initial amount, r is the annual rate as a decimal, n is the number of times interest compounds per year and t is the number of years. Interest earned is A − P.
Does compounding more often make a big difference?
Only a small one. At 8%, ₹1,00,000 grows to about ₹2,15,892 in 10 years with annual compounding and about ₹2,21,964 with monthly compounding. Time and rate matter far more than frequency.
What is the effective annual rate?
It is the single yearly rate that would give the same result as your nominal rate compounded several times a year. An 8% rate compounded monthly has an effective annual rate of about 8.30%.
Can I add regular deposits?
This calculator covers a single starting amount. If you invest a fixed amount every month, use the SIP calculator.
Related calculators
- SIP CalculatorEstimate the future value of a monthly SIP. See the amount invested, the estimated returns and how your investment could grow year by year.
- Simple Interest CalculatorWork out simple interest and the total amount payable from a principal, an annual interest rate and a time period, with a year-by-year breakdown.
- EMI CalculatorCalculate the equated monthly instalment (EMI) on a home, car or personal loan, plus the total interest and a year-by-year repayment schedule.
- Investment CalculatorProject the value of an investment with a starting amount and regular monthly contributions, with a yearly growth table.
Explore more in Investment Calculators.