Compound interest calculator
Compound interest means interest earns interest. This calculator shows the final amount, the interest earned and how much more compounding gives than simple interest.
How to use this calculator
- Enter the principal.
- Enter the yearly interest rate and the number of years.
- Choose how often interest compounds.
- Read the amount, the effective yearly rate and the comparison with simple interest.
Worked examples
Example 1
₹1,00,000 at 8% for 10 years, compounded yearly.
You enter
| Principal | ₹1,00,000 |
|---|---|
| Interest rate (per year) | 8% |
| Years | 10 |
| Compounded | Yearly |
You get
| Amount after 10 years | ₹2,15,892 |
|---|---|
| Interest earned | ₹1,15,892 |
| Effective yearly rate | 8% |
| With simple interest instead | ₹1,80,000 |
Example 2
The same, compounded monthly.
You enter
| Principal | ₹1,00,000 |
|---|---|
| Interest rate (per year) | 8% |
| Years | 10 |
| Compounded | Monthly |
You get
| Amount after 10 years | ₹2,21,964 |
|---|---|
| Interest earned | ₹1,21,964 |
| Effective yearly rate | 8.3% |
| With simple interest instead | ₹1,80,000 |
How it works
The more often interest compounds, the higher the effective yield, but the gain from monthly to daily compounding is small. The biggest factor is time.
The same maths works against you on a loan or credit card balance that you leave unpaid.
Formula
Amount = P x (1 + r / m)^(m x t). Effective yearly rate = (1 + r / m)^m - 1.
Common questions
What is the Rule of 72?
Divide 72 by the rate to estimate the years to double: at 8% about 9 years.
Can I add regular deposits?
Use the SIP or RD calculators for monthly deposits.
Does it include tax?
No.
Learn more
Read the lesson Compounding and the time value of money on pusaram.com for the ideas behind this calculator.
Calculators give estimates for learning and planning. They are not financial, tax, legal or medical advice, and results depend entirely on the numbers you enter. Check rates, limits and rules with an official source or a qualified professional before acting.