Investing calculator
Compound Interest Calculator
Compounding is the reason a long horizon beats a high return. This shows the gap between interest that compounds and interest that does not — and what changing the compounding frequency is really worth.
Your numbers
Value after 15 years
₹18,21,241
₹5,00,000 goes in and ₹13,21,241 is earned. Compounding yearly gives an effective yield of 9% against a quoted 9%.
- Total put in
- ₹5,00,000
- Interest earned
- ₹13,21,241
- Effective yield
- 9%
Compound against simple
Simple interest is a straight line. Compound interest bends — and the gap between them is the whole idea.
- Compound
- Simple interest
What compounding adds
The same ₹5,00,000 at the same 9% would reach only ₹11,75,000 under simple interest. Everything above that is interest earning interest.
+₹6.46 L
Year by year
Capital, accumulated interest and balance.
| Year | Put in | Interest | Balance |
|---|---|---|---|
| Year 1 | ₹5,00,000 | ₹45,000 | ₹5,45,000 |
| Year 2 | ₹5,00,000 | ₹94,050 | ₹5,94,050 |
| Year 3 | ₹5,00,000 | ₹1,47,515 | ₹6,47,515 |
| Year 4 | ₹5,00,000 | ₹2,05,791 | ₹7,05,791 |
| Year 5 | ₹5,00,000 | ₹2,69,312 | ₹7,69,312 |
| Year 6 | ₹5,00,000 | ₹3,38,550 | ₹8,38,550 |
| Year 7 | ₹5,00,000 | ₹4,14,020 | ₹9,14,020 |
| Year 8 | ₹5,00,000 | ₹4,96,281 | ₹9,96,281 |
The arithmetic
How this calculator works
No proprietary model, no adjustment factor we will not name. This is the standard formula, applied exactly as written.
A = P × (1 + r ÷ n)^(n × t)
Effective annual rate = (1 + r ÷ n)ⁿ − 1
With regular top-ups, each period:
balance = (balance + contribution) × (1 + r ÷ n)- P
- Starting amount
- r
- Nominal annual rate, as a decimal
- n
- Compounding periods per year
- t
- Time in years
- A
- Value at the end of the period
- The nominal rate is what gets quoted. The effective annual rate is what you actually earn — 9% compounded monthly is an effective 9.38%, and that gap widens as the rate rises.
- Where a recurring contribution is present, it is added at the start of each compounding period and earns for that whole period.
Worked example
The same maths, on real numbers
₹5,00,000 left alone for fifteen years at 9%, compared under different conventions.
| Starting amount | ₹5,00,000 |
|---|---|
| Rate | 9% p.a. |
| Period | 15 years |
| Simple interest | ₹11,75,000 |
| Compounded yearly | ₹18,21,241 |
| Compounded monthly | ₹19,19,022 |
| Cost of simple vs monthly | ₹7,44,022 |
Same capital, same rate, same fifteen years — and a difference of over seven lakh between the worst and best conventions. Note the shape of the advantage: yearly compounding does most of the work, and moving to monthly adds comparatively little. Frequency is worth checking, but it is nowhere near as powerful as time. Doubling the period from fifteen years to thirty does not double the result; it roughly quadruples it.
What this calculator assumes
- The rate holds unchanged for the entire period.
- Nothing is withdrawn, and all interest stays in the account to compound.
- Regular top-ups, where used, are made at the start of each period without fail.
- Interest is credited exactly on schedule, with no delay.
What it deliberately leaves out
- Tax is not deducted. Interest on deposits is taxable at your slab rate every year, which meaningfully reduces the effective compounding.
- Inflation is not applied. At 6% inflation, a 9% nominal return is a real return closer to 2.8%.
- This models a fixed rate. Market-linked returns vary year to year and cannot be represented by a single number, however convenient it is to try.
Questions about the compound interest calculation
Because the benefit is bounded. Moving from yearly to monthly compounding at 9% raises the effective rate from 9% to about 9.38%; moving from monthly to daily adds only another 0.04 percentage points. Time and rate dominate. Frequency is worth a glance when comparing two otherwise identical products, and not worth agonising over.
Roughly the nominal rate minus inflation, and precisely (1 + nominal) ÷ (1 + inflation) − 1. It is the only figure that tells you whether your purchasing power is growing. A 7% deposit in 6% inflation earns you well under 1% in real terms, before tax takes its share.
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