Investment Details
Estimated Maturity Value
₹0Total Investment
₹0
Total Interest Earned
₹0
Initial Principal
Wealth Gained
Principal: ₹0
Interest: ₹0
What is Compound Interest?
Compound interest is the interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan. It is often referred to as "interest on interest."
In India, compounding is a fundamental concept used in everything from bank savings accounts and Fixed Deposits (FDs) to debt mutual funds and the Public Provident Fund (PPF). The more frequently interest is compounded (e.g., quarterly vs. yearly), the faster your wealth grows.
Compound Interest Formula
A = P(1 + r/n)nt
- A: Total amount (Future Value)
- P: Principal investment amount
- r: Annual interest rate (decimal)
- n: Number of times interest compounds per year
- t: Number of years the money is invested
Simple Interest vs Compound Interest
| Feature | Simple Interest | Compound Interest |
|---|---|---|
| Calculation | Only on Principal | On Principal + Accumulated Interest |
| Growth | Linear (Flat) | Exponential (Curve) |
| Usage in India | Personal loans, short term dues | Mutual Funds, FDs, PPF, Retirement Corpuses |
Frequently Asked Questions
What is the "Rule of 72"?
It is a simple formula to see how long it takes to double your money. Divide 72 by the annual interest rate. E.g., at 10% returns, your money doubles in approx 7.2 years.
What interest rate doubles money in 10 years?
To double your money in exactly 10 years, you need an annual compounded return of approximately 7.2% to 7.5% per annum.
How often should interest compound?
The higher the frequency, the better. Monthly compounding results in a slightly higher maturity amount than quarterly or yearly compounding for the same interest rate.
Is Mutual Fund growth compound interest?
Technically, mutual funds provide returns measured as CAGR. While the math is identical to compound interest, the returns are market-linked and not fixed.
Can I calculate CI for partial years?
Yes, our calculator supports whole years. For fractional years, you can use the power formula (t = 1.5 for 18 months) which banks often use.
What is the "Power of Compounding"?
It refers to the effect where the growth of your investment speeds up over time because the returns from previous years also start generating their own returns.
Does CI apply to Home Loans?
No, standard home and car loans in India use "Monthly Reducing Balance" method. You can calculate those using our EMI Calculator.
What is EEE status in PPF?
Exempt-Exempt-Exempt. It means the investment, the compounding interest, and the final maturity amount are all tax-free.
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Disclaimer
This calculator provides mathematical estimations based on your inputs. Final returns may vary depending on tax laws and market conditions.Last Updated: March 2026