Compound Interest Calculator
Calculate the power of compounding on your investments
💡 Tip: Click value to edit directly. Supports shorthand (5L, 2.5Cr) or exact numbers (725000)
Compound vs Simple Interest
Principal Amount
Interest Earned
Compounding Summary
Year-wise Growth Projection
Understanding Compound Interest
Compound interest is the addition of interest to the principal sum of a loan or deposit. It's the result of reinvesting interest, rather than paying it out, so that interest in the next period is earned on the principal sum plus previously accumulated interest.
Key Benefits:
- Exponential Growth: Your money grows faster over time
- Time is Your Friend: The earlier you start, the more you benefit
- Passive Income: Your money works for you continuously
- Frequency Matters: More frequent compounding means higher returns
Compound Interest Formula:
Where: A = Final amount, P = Principal, r = Annual interest rate, n = Compounding frequency, t = Time in years
Einstein's Quote:
"Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn't, pays it."
Frequently Asked Questions
What's the difference between simple and compound interest?
Simple interest is calculated only on the principal amount, while compound interest is calculated on both principal and accumulated interest.
How does compounding frequency affect returns?
Higher frequency means more frequent compounding, which results in slightly higher returns. However, the difference between monthly and daily compounding is usually minimal.
What investments offer compound interest?
Fixed deposits, bonds, mutual funds, stocks (through reinvested dividends), and many other investment vehicles offer compound growth.
Is compound interest guaranteed?
Only in fixed-return investments like FDs. In market-linked investments, the compounding depends on actual returns achieved.