Compound Interest Calculator
Calculate compound interest for any investment. Compare with simple interest. Year-by-year growth breakdown included.
The Power of Compound Interest — Why Einstein Called It the 8th Wonder
Compound interest is the process of earning interest on both your principal AND the previously accumulated interest. Over time, this creates exponential growth — even a modest investment can grow dramatically over 10–30 years. The key insight is that starting early is more powerful than investing more later. Our compound interest calculator shows year-by-year growth and compares your compound returns against simple interest so you can see exactly how much extra compound interest earns you.
Frequently Asked Questions
What is the compound interest formula? ▼
A = P × (1 + r/n)^(n×t) where A = final amount, P = principal, r = annual interest rate (decimal), n = compounding frequency per year, t = time in years. Compound Interest = A − P.
What is the rule of 72 for compound interest? ▼
The Rule of 72 estimates how long it takes to double your money: Years to Double = 72 ÷ Interest Rate. At 8%: 72÷8 = 9 years. At 12%: 72÷12 = 6 years. At 7.1% (PPF rate): 72÷7.1 ≈ 10 years to double.
Which is better — monthly or annual compounding? ▼
Monthly compounding earns more because interest is calculated and added more frequently. At 12% annual rate: annual compounding gives 12% effective return; monthly compounding gives 12.68% effective annual yield. More frequent compounding = more growth.
If I invest ₹1 lakh at 12% for 10 years, what do I get? ▼
With annual compounding: ₹1,00,000 × (1.12)^10 = ₹3,10,585. Compound interest earned: ₹2,10,585. Simple interest would have given only ₹1,20,000. This is the power of compounding — nearly 2.1× more than simple interest.
What is the difference between compound interest and simple interest? ▼
Simple Interest = P × R × T (interest on principal only). Compound Interest = P × (1+r/n)^(n×t) − P (interest on principal + accumulated interest). Over long periods, compound interest grows exponentially while simple interest grows linearly.