Compound Interest Calculator: The Power of Interest on Interest

Compounding is how small sums become large ones. This calculator shows how your money grows when interest earns interest.

What is it?

Compound interest adds each period’s interest back to the principal, so future interest is earned on a growing base — unlike simple interest.

How is it calculated?

A = P × (1 + r/n)^(n×t), where P is the principal, r the annual rate, n the compounding frequency and t the years.

Example

₹1 lakh at 8% compounded annually for 10 years grows to about ₹2.16 lakh; the same at simple interest gives only ₹1.8 lakh.

Key things to know

• More frequent compounding means a slightly higher final amount.
• Time matters more than the rate over long horizons.
• Start early to let compounding work.
• Reinvest returns rather than withdrawing them.

What to do next

Use compounding to your advantage with long-term investments.

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Frequently asked questions

Compound vs simple interest?
Compound earns interest on interest; simple does not.

Does compounding frequency matter?
Yes, more frequent compounding gives a higher result.

Where does compounding help most?
Long-term investments like equity and PPF.

Disclaimer: This article is for general information only and is not financial or tax advice. Consult a qualified advisor before making investment or tax decisions.