Compound Interest Calculator
Estimate how an initial amount and regular contributions may grow. Compare compounding frequencies, simple interest, effective annual yield and inflation-adjusted value.
Last Updated: July 22, 2026Calculate Compound Growth
Enter your assumptions, then select Calculate Growth. Results include a year-wise projection.
Enter valid figures and select Calculate Growth.
| Year | Contribution that year | Total contributions | Interest earned | Projected balance | Today's value |
|---|
The calculation assumes a constant nominal annual rate and regular deposits. Actual savings rates and investment returns may change. Taxes, fees, penalties and account-specific rules are excluded.
What Is Compound Interest?
Compound interest is interest calculated on both the original principal and previously credited interest. Your balance becomes the base for the next interest calculation. Over time, this creates interest on interest.
Suppose ₹1,00,000 earns 8% compounded annually. After year one, the balance is ₹1,08,000. In year two, the same 8% applies to ₹1,08,000, not only to the original ₹1,00,000. The second year's interest is ₹8,640, and the balance reaches ₹1,16,640.
The effect depends on four main inputs: principal, interest rate, time and compounding frequency. Regular contributions add a fifth driver. The U.S. Investor.gov compound interest tool also uses initial investment, monthly contributions, time and estimated interest rate as core planning inputs.
How to Use This Compound Interest Calculator
- Enter the amount already saved or invested. Use zero if you plan to start only with regular deposits.
- Add the contribution made every month, quarter, half-year or year. Enter zero to calculate growth on principal alone.
- Select whether each contribution arrives at the start or end of its interval.
- Enter the nominal annual interest rate and number of complete years.
- Choose how often interest compounds. Match the account terms where possible.
- Add an annual contribution increase if you expect deposits to rise. Keep it at 0% for fixed contributions.
- Enter inflation to estimate the future balance in today's purchasing power, then select Calculate Growth.
Review the future balance with total contributions, interest earned and inflation-adjusted value. A high nominal balance may represent less purchasing power than it appears to have.
Compound Interest Formula
For one principal amount with no extra contributions, the standard formula is:
A = P × (1 + r ÷ n)n × t
- A is the final amount.
- P is the initial principal.
- r is the nominal annual rate written as a decimal.
- n is the number of compounding periods per year.
- t is time in years.
Recurring contributions need a cash-flow calculation because each deposit remains invested for a different length of time. This tool projects every contribution interval. It applies the equivalent growth factor for the selected compounding frequency, then adds the deposit at the start or end of the interval.
Worked Example
Assume you start with ₹1,00,000, contribute ₹5,000 at the start of every month, earn a nominal 8% compounded monthly and continue for 10 years.
- Initial principal: ₹1,00,000
- Monthly deposits: ₹5,000 × 120 = ₹6,00,000
- Total contributions: ₹7,00,000
- Projected balance: about ₹11,42,792
- Compound interest earned: about ₹4,42,792
This example assumes the same rate throughout the period and every deposit arrives on time. A real account or investment will follow its own crediting rules, rate changes, charges and taxes.
How Compounding Frequency Changes Growth
More frequent compounding credits interest sooner. The balance then earns interest on those earlier credits. The difference is often modest over one year but grows with the rate, principal and time.
| Frequency | Times per year | ₹1,00,000 after 10 years at 8% |
|---|---|---|
| Yearly | 1 | ₹2,15,892 |
| Half-yearly | 2 | ₹2,19,112 |
| Quarterly | 4 | ₹2,20,804 |
| Monthly | 12 | ₹2,21,964 |
| Daily | 365 | ₹2,22,535 |
Do not compare accounts only by the stated nominal rate. Check annual percentage yield, or APY, where available. APY includes the effect of compounding and provides a cleaner one-year comparison when the products follow the same assumptions.
Compound Interest vs Simple Interest
Simple interest applies the rate only to contributed principal. Compound interest also earns a return on past interest. The gap tends to widen over longer periods.
| Feature | Simple interest | Compound interest |
|---|---|---|
| Interest base | Principal contributions | Principal plus credited interest |
| Growth pattern | More linear | Accelerates when returns stay positive |
| Frequency effect | Usually no compounding effect | More frequent crediting raises effective yield |
| Typical planning use | Basic loans or stated simple-rate products | Savings, deposits and long-term growth estimates |
The calculator's simple-interest benchmark uses the same contribution dates. Each contributed rupee earns simple interest only for the time it remains in the plan. This produces a fairer comparison than applying simple interest to all future deposits from day one.
Nominal Rate, Effective Annual Yield and APY
A nominal annual rate does not include the full effect of within-year compounding. Effective annual yield does. The calculator uses:
Effective annual yield = (1 + r ÷ n)n − 1
At an 8% nominal rate compounded monthly, the effective annual yield is about 8.30%. Daily compounding produces about 8.33% under the same nominal rate. An advertised APY may already include compounding, so do not enter APY as a nominal rate unless the product instructions support that conversion.
Investments do not usually credit a fixed guaranteed rate like a deposit account. When you use this tool for investing, the rate is an assumption. Returns may be negative, uneven or lower than the estimate.
Contribution Timing and Annual Step-Up
A start-of-period deposit grows for one additional interval compared with an end-of-period deposit. The difference is small for one payment but accumulates across many contributions.
An annual step-up increases the recurring deposit after every completed year. For example, a ₹5,000 monthly contribution with a 10% annual increase becomes ₹5,500 in year two and ₹6,050 in year three. The higher result comes from contributing more money as well as earning growth on those larger contributions.
Use a step-up rate your future budget is likely to support. A calculator assumes every scheduled increase happens. Missed deposits, withdrawals or a lower actual increase will reduce the final balance.
Rule of 72 and Doubling Time
The Rule of 72 provides a quick estimate of how many years a positive rate may take to double money. Divide 72 by the annual percentage rate. At 8%, the estimate is 9 years. At 12%, it is 6 years.
Investor.gov's Rule of 72 explanation uses the same approach. It is a shortcut, not an exact forecast. Compounding frequency, fees, taxes and changing returns affect the real doubling time. The rule also does not apply to a 0% rate.
Why Inflation-Adjusted Value Matters
Inflation reduces what a future amount buys. The calculator divides the projected balance by (1 + inflation)years to express it in today's purchasing power.
For example, ₹10 lakh received 15 years from now has an approximate present purchasing power of ₹4.17 lakh at 6% annual inflation. Your future account still shows ₹10 lakh. The lower figure helps you compare the balance with today's prices.
Inflation differs by expense. Education, healthcare, housing and food costs do not rise at one constant rate. Test more than one assumption for an important goal.
How to Improve Your Compound Growth Plan
- Start earlier when your budget and emergency needs allow.
- Contribute regularly instead of relying only on a high assumed rate.
- Compare products using effective yield, fees, lock-ins and withdrawal rules.
- Reinvest credited interest when the product allows it.
- Increase contributions after income growth, but keep the target affordable.
- Test conservative rates and higher inflation before committing to a goal.
- Review the plan after rate, income, tax or goal changes.
Higher return usually involves higher risk. Do not select an investment solely because a projected balance looks attractive. Check liquidity, capital risk, credit quality, volatility, tax treatment and whether the time horizon matches your goal.
Limitations of This Calculator
The tool assumes a constant nominal rate, complete years and regular contribution intervals. It does not model irregular cash flows, changing rates, market volatility, taxes, account fees, deposit insurance limits, early-withdrawal penalties or minimum balance rules.
Daily compounding uses 365 periods per year. A financial institution may use a different day-count method, crediting schedule, rounding convention or balance calculation. Use the institution's statement and product terms for an exact account value.
Related Investment Calculators
Use these tools to compare recurring investments, fixed deposits, annualized growth and purchasing power.
Frequently Asked Questions
How accurate is this compound interest calculator?
The arithmetic is accurate for the entered assumptions and stated timing method. The result is an estimate because actual rates, fees, taxes, deposit dates and product rules may differ.
What is the formula for compound interest?
For principal alone, the formula is A = P × (1 + r ÷ n) raised to n × t. Regular contributions require calculating each deposit for the time it remains in the plan.
What happens when the interest rate is 0%?
The projected balance equals the initial principal plus all contributions. Compound interest, simple interest and extra growth from compounding are zero.
Is monthly or yearly compounding better?
At the same nominal rate, monthly compounding produces a slightly higher effective yield than yearly compounding because interest is credited sooner.
Does contribution timing affect the result?
Yes. A start-of-interval contribution receives one extra interval of growth compared with the same contribution added at the end.
What is the difference between compound interest and CAGR?
Compound interest calculates value from a rate and compounding schedule. CAGR measures the smoothed annual growth rate between a beginning value and an ending value.
Does this calculator include tax and fees?
No. Results are before taxes, account charges, fund expenses, penalties and other deductions. Net proceeds may be lower.
What does money multiple mean?
Money multiple divides the projected balance by total contributions. A 1.60× result means the estimated balance is 1.6 times the money contributed, before deductions.
Is the Rule of 72 exact?
No. It is a quick doubling-time estimate. The exact result depends on the interest rate, compounding frequency and whether the rate stays constant.