Quick answer
How does compound interest work?
Compound interest adds each period’s interest to your balance, so the next period earns interest on a larger amount. ₹1,00,000 at 10% compounded yearly grows to about ₹2,59,374 in 10 years, compared with ₹2,00,000 under simple interest. At 8%, money roughly doubles every 9 years.
- Formula: A = P × (1 + r/n)n·t
- Rule of 72: years to double ≈ 72 ÷ interest rate
- Monthly additions grow the fastest when started early
What is the compound interest formula?
Example: ₹1,00,000 at 10% for 10 years, compounded yearly
A = 1,00,000 × 1.110 ≈ ₹2,59,374. Simple interest would give only ₹2,00,000, so compounding adds ₹59,374.
How do monthly additions grow your savings?
Regular additions usually matter more than the starting amount. With the calculator’s default inputs, ₹1,00,000 plus ₹5,000 a month at 8% compounded monthly grows to about ₹11,36,694 in 10 years. You put in ₹7,00,000, so about ₹4,36,694 is interest. Without the monthly additions, the same ₹1,00,000 reaches only about ₹2,21,964.
That makes this compound interest calculator a handy savings calculator for any regular plan, such as a recurring deposit or a savings account that pays a steady rate. Choose ₹, $, £ or € and the results switch currency. For example, $10,000 plus $200 a month at 5% grows to about $47,527 in 10 years.
How much does compounding frequency matter?
Interest that compounds more often grows slightly faster, because each period’s interest starts earning sooner. Here is ₹1,00,000 at 8% for 10 years with no additions:
| Compounding | Value after 10 years |
|---|---|
| Yearly | ₹2,15,892 |
| Half-yearly | ₹2,19,112 |
| Quarterly | ₹2,20,804 |
| Monthly | ₹2,21,964 |
| Daily | ₹2,22,535 |
The gap between yearly and daily compounding is under ₹7,000. The rate and the number of years change the result far more. In India, bank FDs usually compound quarterly and PPF compounds yearly. In the US, if your bank quotes an APY, enter it as the rate with yearly compounding, because APY already includes compounding.
Frequently asked questions
What is the compound interest formula?
A = P × (1 + r/n)^(n × t), where P is the starting amount, r the annual rate, n the number of times interest compounds each year and t the number of years.
How much will ₹1 lakh become in 10 years at 10%?
Compounded yearly, ₹1,00,000 at 10% becomes about ₹2,59,374 in 10 years, of which ₹1,59,374 is interest.
What is the rule of 72?
Divide 72 by the interest rate to estimate how many years it takes to double your money. At 8%, money doubles in about 9 years.
Does more frequent compounding make a big difference?
A little. At 8% for 10 years, monthly compounding ends about 3% higher than yearly compounding. Time and the rate matter far more.
Are monthly additions added at the start or end of the month?
The calculator adds them at the end of each month, after that month’s interest. Each addition then earns interest from the following month, at a monthly rate that matches the compounding frequency you choose.
How much will ₹5,000 a month become in 20 years at 8%?
With monthly compounding and no starting amount, ₹5,000 a month at 8% grows to about ₹29,45,102 in 20 years. You put in ₹12,00,000, so about ₹17,45,102 is interest.