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Compound Interest Calculator
Lumpsum investment growth · All compounding frequencies · Rule of 72 · Updated 2026
Daily / monthly / yearlyAnnual top-upvs Simple interestRule of 72
Enter your investment details
₹
₹1K₹1Cr
%
1%36%
years
1years40years
Compounding frequency
Annual top-up amount(optional - additional investment each year)
₹
Maturity amount
₹3.11 L
final corpus
Total invested
₹1.00 L
what you put in
Interest earned
₹2.11 L
210.6% gain
⚡
Rule of 72: Your money doubles in 6.0 years at 12%
Divide 72 by the interest rate to get doubling time. At 12%: 72 ÷ 12 = 6.0 years. Over 10 years, ₹1,00,000 doubles 1× — your starting principal becomes ₹3,17,480 by doubling alone.
Compound vs simple interest - ₹1 lakh at 12% for 10 years
Compound interest
₹2.11 L
Maturity: ₹3.11 L
Simple interest
₹1.20 L
Maturity: ₹2.20 L
✨
Compounding earns you ₹90,585 extra compared to simple interest over 10 years - purely from interest-on-interest.
Corpus growth - year by year
InterestPrincipal
Yr 1Yr 2Yr 3Yr 4Yr 5Yr 6Yr 7Yr 8Yr 9Yr 10
Principal
₹1.00 L
Rate
12% p.a.
Compounding
Annually
Multiplier
3.11×
How compounding frequency affects returns
₹1 lakh at 12% for 10 years - same principal, different frequencies
| Frequency | Times/year | Maturity amount | Interest earned | vs Annual |
|---|---|---|---|---|
| Annually(selected) | 1 | ₹3.11 L | ₹2.11 L | — |
| Half-yearly | 2 | ₹3.21 L | ₹2.21 L | +₹10,129 |
| Quarterly | 4 | ₹3.26 L | ₹2.26 L | +₹15,619 |
| Monthly | 12 | ₹3.30 L | ₹2.30 L | +₹19,454 |
| Daily | 365 | ₹3.32 L | ₹2.32 L | +₹21,361 |
Year-by-year schedule
Showing first 10 years
| Year | Amount invested | Interest earned | Balance | Growth |
|---|---|---|---|---|
| 1 | ₹1,00,000 | ₹12,000 | ₹1,12,000 | +12.0% |
| 2 | ₹1,00,000 | ₹25,440 | ₹1,25,440 | +12.0% |
| 3 | ₹1,00,000 | ₹40,493 | ₹1,40,493 | +12.0% |
| 4 | ₹1,00,000 | ₹57,352 | ₹1,57,352 | +12.0% |
| 5 | ₹1,00,000 | ₹76,234 | ₹1,76,234 | +12.0% |
| 6 | ₹1,00,000 | ₹97,382 | ₹1,97,382 | +12.0% |
| 7 | ₹1,00,000 | ₹1,21,068 | ₹2,21,068 | +12.0% |
| 8 | ₹1,00,000 | ₹1,47,596 | ₹2,47,596 | +12.0% |
| 9 | ₹1,00,000 | ₹1,77,308 | ₹2,77,308 | +12.0% |
| 10 | ₹1,00,000 | ₹2,10,585 | ₹3,10,585 | +12.0% |
Formula used
A = P × (1 + r/n)^(n×t)
A = Final amount (maturity value)
P = Principal (₹1,00,000)
r = Annual rate ÷ 100 (12% → 0.1200)
n = Compounding times per year (1)
t = Time in years (10)
A = ₹1,00,000 × (1 + 0.120000)^10 = ₹3.11 L
What is Compound Interest? The Eighth Wonder of the World
Compound interest is interest calculated not just on the initial principal, but also on the interest already earned. In simple terms: your interest earns interest. This seemingly small difference creates an extraordinary effect over long time periods - a phenomenon Albert Einstein reportedly called the eighth wonder of the world.
At 12% compound interest, ₹1 lakh grows to ₹3.1 lakh in 10 years, ₹9.6 lakh in 20 years, and ₹29.9 lakh in 30 years. The same ₹1 lakh at 12% simple interest grows to only ₹2.2 lakh, ₹3.4 lakh, and ₹4.6 lakh in the same periods. The compound effect is ₹25+ lakh extra on the same original investment - from interest-on-interest alone.
Compound vs simple interest - the growing gap
| Year | Simple interest (12%) | Compound interest (12%) | Compounding bonus |
|---|---|---|---|
| Year 1 | ₹1.12 L | ₹1.12 L | +₹0 |
| Year 3 | ₹1.36 L | ₹1.40 L | +₹4,493 |
| Year 5 | ₹1.60 L | ₹1.76 L | +₹16,234 |
| Year 7 | ₹1.84 L | ₹2.21 L | +₹37,068 |
| Year 10 | ₹2.20 L | ₹3.11 L | +₹90,585 |
| Year 15 | ₹2.80 L | ₹5.47 L | +₹2.67 L |
| Year 20 | ₹3.40 L | ₹9.65 L | +₹6.25 L |
| Year 25 | ₹4.00 L | ₹17.00 L | +₹13.00 L |
| Year 30 | ₹4.60 L | ₹29.96 L | +₹25.36 L |
The Rule of 72 - instantly estimate doubling time
The Rule of 72 is a mental shortcut: divide 72 by the annual interest rate to get the approximate number of years it takes for money to double. It works remarkably well for rates between 6% and 20%.
| Annual rate | Rule of 72 | Exact doubling | ₹1L becomes ₹2L in |
|---|---|---|---|
| 4% p.a. | 18.0 yrs | 17.67 yrs | 18.0 years |
| 6% p.a. | 12.0 yrs | 11.90 yrs | 12.0 years |
| 8% p.a. | 9.0 yrs | 9.01 yrs | 9.0 years |
| 10% p.a. | 7.2 yrs | 7.27 yrs | 7.2 years |
| 12% p.a. | 6.0 yrs | 6.12 yrs | 6.0 years |
| 15% p.a. | 4.8 yrs | 4.96 yrs | 4.8 years |
| 18% p.a. | 4.0 yrs | 4.19 yrs | 4.0 years |
| 24% p.a. | 3.0 yrs | 3.22 yrs | 3.0 years |
Where compound interest works for and against you
✓ Works in your favour
Equity mutual funds (SIP & lumpsum)
~10–15% CAGR historically
Public Provident Fund (PPF)
7.1% tax-free, compounded annually
Employee Provident Fund (EPF)
~8.25%, compounded annually
Fixed deposits (quarterly)
6–8%, compounded quarterly
National Savings Certificate (NSC)
7.7%, compounded semi-annually
Recurring deposits
6–7.5%, compounded quarterly
✗ Works against you
Credit card revolving debt
36–42% APR, compounded daily
Personal loan (unpaid EMIs)
12–18% APR, compounded monthly
Payday / salary advance loans
Sometimes 100%+ annualised
Loan against gold
18–24% if not repaid in time
BNPL (buy now pay later) interest
24–36% on outstanding dues
EMI conversion late fees
Compounds if EMI missed
See how SIP uses compounding monthly
Regular SIP combines rupee-cost averaging with compounding - a powerful combination
Frequently asked questions
What is the difference between compound and simple interest?▼
Simple interest is calculated only on the original principal for every period. If you invest ₹1 lakh at 10% simple interest, you earn ₹10,000 each year — always on the original ₹1 lakh. Compound interest calculates interest on the growing balance. In Year 1 you earn ₹10,000. In Year 2 you earn 10% of ₹1,10,000 = ₹11,000. In Year 3, 10% of ₹1,21,000 = ₹12,100. The interest amount grows every year because the base grows. Over 20 years, ₹1 lakh at 10% simple interest = ₹3 lakh. At 10% compound interest = ₹6.73 lakh. The difference is entirely due to interest earning interest.
Does more frequent compounding always mean more returns?▼
Yes, more frequent compounding always produces a slightly higher return - but the difference diminishes rapidly. Going from annual to quarterly compounding on ₹1 lakh at 10% for 10 years adds about ₹3,600. Going from quarterly to daily adds only about ₹700 more. The jump from annual to monthly is meaningful; beyond monthly the gains become negligible for practical purposes. For Indian retail investments like FDs and PPF, the compounding frequency is fixed by the product - you don't choose it.
How is compound interest calculated in Indian FDs?▼
Most Indian bank FDs compound interest quarterly. Using the formula A = P(1 + r/4)^(4t) where r is the annual rate and t is years. For a ₹1 lakh FD at 7% for 3 years: A = 1,00,000 × (1 + 0.07/4)^12 = 1,00,000 × (1.0175)^12 = ₹1,23,144. The quarterly compounding adds ₹144 more than annual compounding (which gives ₹1,22,504) on this amount. Small FDs benefit little from quarterly vs annual compounding, but on larger amounts or longer tenures the difference compounds significantly.
What is CAGR and how is it related to compound interest?▼
CAGR (Compound Annual Growth Rate) is essentially compound interest calculated backwards from an investment's start and end value. If ₹1 lakh grew to ₹3.1 lakh over 10 years, the CAGR = (3.1/1)^(1/10) − 1 = 12%. CAGR is used to describe investment returns because it smooths out year-to-year volatility into a single equivalent annual rate. When fund managers say 'this fund delivered 15% CAGR over 10 years,' they mean the equivalent compound annual return was 15%.
How does inflation affect compound interest returns?▼
Inflation erodes the real value of your returns. If you earn 8% compound interest on an FD but inflation is 6%, your real return is approximately 8 − 6 = 2% (more precisely: (1.08/1.06) − 1 = 1.89%). For ₹1 lakh invested at 8% for 10 years, the nominal maturity is ₹2.16 lakh - but in today's purchasing power (assuming 6% inflation), that ₹2.16 lakh is worth only about ₹1.21 lakh. This is why financial advisors emphasise investing in assets that beat inflation - equity mutual funds historically deliver 4–6% real returns after inflation.
Is PPF compound interest taxable?▼
No. PPF interest is completely tax-free under Section 10(11) of the Income Tax Act - on both the interest earned and the maturity amount. This makes PPF's effective pre-tax return significantly higher than the nominal rate. At 7.1% tax-free, PPF is equivalent to earning 10.1% pre-tax for someone in the 30% tax bracket. Combine this with the Section 80C deduction on contributions and PPF becomes one of India's most tax-efficient savings instruments despite its 15-year lock-in.
What is the power of starting early? Show me numbers.▼
The power of starting early is the most dramatic illustration of compounding. If Priya invests ₹1 lakh at age 25 and never adds another rupee - just lets it compound at 12% - by age 60 she has ₹52.8 lakh. If Rahul waits until 35 to invest the same ₹1 lakh and also never adds another rupee, by age 60 he has only ₹17 lakh. Priya ends up with 3× more money from the same ₹1 lakh investment - purely because she started 10 years earlier. Every year you delay reduces your final corpus by roughly 12% (at 12% rate) - compounded over decades this is enormous.