See the power of compounding. Calculate returns with daily, monthly, quarterly or annual frequency and watch your money grow.
| Year | Opening Balance | Interest Earned | Closing Balance | vs Simple Interest |
|---|
A Compound Interest Calculator is a free online financial tool that computes the growth of an investment or loan when interest is calculated on both the principal and the accumulated interest from previous periods. This is the fundamental concept of "interest on interest" — the engine behind long-term wealth creation. This calculator supports four compounding frequencies: daily, monthly, quarterly, and annually, covering all common investment and savings instruments in India.
Compound interest is considered one of the most powerful forces in personal finance. Albert Einstein reportedly called it the "eighth wonder of the world." Unlike simple interest (calculated only on the principal), compound interest grows exponentially because each interest payment is added to the principal before the next period's interest is calculated. The more frequently compounding occurs, the higher the effective yield.
| Principal | Rate | Years | Simple Interest | Compound (Monthly) | Extra via CI |
|---|---|---|---|---|---|
| ₹1,00,000 | 10% | 5 | ₹1,50,000 | ₹1,64,531 | ₹14,531 |
| ₹1,00,000 | 10% | 10 | ₹2,00,000 | ₹2,70,704 | ₹70,704 |
| ₹5,00,000 | 12% | 15 | ₹14,00,000 | ₹27,23,108 | ₹13,23,108 |
| ₹10,00,000 | 8% | 20 | ₹26,00,000 | ₹49,26,803 | ₹23,26,803 |
The Ponderal Index (PI = mass/height³) assesses physical proportionality. In investing, the "Investment Growth Ratio" (Final Value ÷ Principal) is a similar indicator of financial health. A ratio below 1.5x in 10 years suggests your money isn't working hard enough. A ratio of 3x or more in 10 years (achievable at 12%+ with monthly compounding) indicates excellent financial fitness.
Step 1: Enter your initial investment amount (principal). Step 2: Enter the annual interest rate offered. Step 3: Enter the investment period in years. Step 4: Select compounding frequency — daily gives highest returns, yearly gives lowest. Step 5: Click "Calculate Returns" to see maturity amount, year-wise growth table, and comparison with simple interest.
Fixed Deposits (FDs) typically compound quarterly. PPF compounds yearly at 7.1%. Small savings schemes like Post Office MIS use monthly compounding. Mutual fund SIPs grow through daily NAV-based compounding. NSC (National Savings Certificate) compounds twice yearly. Understanding your instrument's compounding frequency helps you compare true returns across investment options.
This calculator assumes a constant interest rate throughout the tenure, which may not hold for floating-rate instruments. It does not account for taxes on interest income (TDS applies if FD interest exceeds ₹40,000 per year). Inflation is not considered — real returns could be lower. Early withdrawal penalties and lock-in periods for instruments like PPF, NSC, or Tax Saver FDs are not modeled.
Daily compounding (n=365) is used in US savings accounts and some digital platforms. Monthly compounding (n=12) is the most common for FDs, RDs, and loans in India. Quarterly compounding (n=4) is used by most Indian banks for standard FDs. Annual compounding (n=1) is used for PPF, bonds, and some government schemes. The difference in effective yield between daily and annual compounding grows significantly over longer periods.