Compound Interest Calculator

Compound interest is interest calculated on the initial principal amount and also on the accumulated interest from previous periods. It's often called "interest on interest" and is one of the most powerful concepts in finance.

Unlike simple interest, which is calculated only on the principal amount, compound interest allows your investment to grow exponentially over time. This means that as interest is added to your principal, the next interest calculation is based on a larger amount, creating a snowball effect.

For example, if you invest $1,00,000 at 10% annual interest:

• Year 1: You earn $10,000 interest (total: $1,10,000)
• Year 2: You earn $11,000 interest (10% of $1,10,000, total: $1,21,000)
• Year 3: You earn $12,100 interest (10% of $1,21,000, total: $1,33,100)

This exponential growth makes compound interest particularly powerful for long-term investments like fixed deposits, mutual funds, and retirement savings.

Our compound interest calculator uses the standard compound interest formula to compute your investment growth:

Compound Interest Formula: A = P(1 + r/n)^(nt)

Where:

• A = Final amount (principal + interest)
• P = Principal (initial investment)
• r = Annual interest rate (as a decimal)
• n = Number of times interest compounds per year
• t = Time period in years

Example Calculation:

Principal = $5,00,000

Annual Rate = 8%

Compounding = Monthly (12 times per year)

Time = 5 years

A = 5,00,000 × (1 + 0.08/12)^(12×5)

A = 5,00,000 × (1.00667)^60

A = 5,00,000 × 1.4898

A = $7,44,900

Interest Earned = $7,44,900 - $5,00,000 = $2,44,900

The calculator supports different compounding frequencies (annually, semi-annually, quarterly, monthly, daily) and automatically calculates the growth with detailed year-wise breakdown.

Using a compound interest calculator offers several advantages:

Investment Planning: Plan your long-term investments by seeing how your money grows over time. Calculate how much you need to invest today to reach your financial goals.

Compare Options: Compare different investment options with varying interest rates and compounding frequencies. See which option gives you the best returns over time.

Visual Understanding: View charts showing how your investment grows year by year. The visual representation helps you understand the power of compounding.

No Login Required: Our compound interest calculator is completely free and doesn't require any registration. Use it unlimited times to plan different investment scenarios.

Accurate Calculations: Get precise calculations based on standard financial formulas used by banks and financial institutions worldwide.

Multiple Compounding Frequencies: Calculate compound interest with annual, semi-annual, quarterly, monthly, or daily compounding to match your investment type.

While our calculator does this automatically, here's how to calculate compound interest manually:

Step 1: Convert annual rate to decimal

r = Annual Rate ÷ 100

Step 2: Determine compounding frequency

n = Number of times per year (12 for monthly, 4 for quarterly, etc.)

Step 3: Calculate the growth factor

Growth Factor = (1 + r/n)^(n×t)

Step 4: Calculate final amount

A = P × Growth Factor

Step 5: Calculate interest earned

Interest = A - P

Manual Example:

P = $2,00,000, Rate = 10%, Compounding = Monthly, Time = 3 years

Step 1: r = 10 ÷ 100 = 0.10

Step 2: n = 12 (monthly)

Step 3: Growth Factor = (1 + 0.10/12)^(12×3) = (1.00833)^36 = 1.3482

Step 4: A = 2,00,000 × 1.3482 = $2,69,640

Step 5: Interest = 2,69,640 - 2,00,000 = $69,640

Our calculator automates this complex calculation and provides detailed year-wise breakdowns.