Compound Interest Calculator
Calculate the future value and total interest earned on an investment using the power of compound interest.
Results
| Future Value | |
|---|---|
| Total Interest Earned | |
| Principal Amount |
What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, it grows faster over time because you effectively earn "interest on interest".
Compound interest formula used
A = P × (1 + r/n)^(n×t), where P is the principal, r is the annual interest rate, n is the number of times interest compounds per year, and t is the time in years.
How to use this tool
- Enter your principal investment amount.
- Enter the expected annual interest rate and the investment time period in years.
- Choose how often interest compounds and click Calculate to see the future value and total interest earned.
Frequently Asked Questions
How does compounding frequency affect returns?
The more frequently interest compounds — daily or monthly versus annually — the faster your investment grows, since interest is calculated and added to the principal more often.
What is the difference between compound interest and simple interest?
Simple interest is calculated only on the original principal throughout the tenure, while compound interest is calculated on the principal plus all previously accumulated interest, resulting in faster growth over time.
Which investments in India use compound interest?
Fixed Deposits, Recurring Deposits, PPF, and most mutual fund and equity returns are all commonly expressed and calculated using compound interest principles.
Is a higher compounding frequency always significantly better?
The difference between monthly and daily compounding is usually small in practice, while the difference between annual and monthly compounding can be more noticeable over long tenures and higher interest rates.
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