How to use the compound interest calculator
- Enter the initial investment, the annual interest rate and the time period (years, months or days).
- Choose how often interest is compounded. Bank FDs in India are usually quarterly; savings accounts are often daily or monthly.
- Optionally add a monthly contribution to model a recurring deposit or SIP-style investing.
- Read the maturity amount and interest earned, then scroll the yearly table to see the growth each year.
Features
- Yearly, half-yearly, quarterly, monthly and daily compounding
- Optional monthly contributions with their own interest
- Maturity amount, interest earned, effective annual rate and growth multiple
- Year-by-year table with opening balance, deposits, interest and closing balance
- Formula displayed with the actual numbers used
The compound interest formula
A = P × (1 + r ÷ n)^(n × t), where P is the principal, r is the annual rate as a decimal (8% = 0.08), n is the number of compounding periods per year and t is the time in years. Interest earned is A − P.
Worked example: 1,00,000 at 8% for 5 years compounded yearly gives 1,00,000 × 1.08⁵ = 1,46,932.81. Compounded monthly (n = 12) it gives 1,00,000 × (1 + 0.08 ÷ 12)⁶⁰ = 1,48,984.57. More frequent compounding earns a little more, which is why the effective annual rate (8.30% for monthly) is higher than the nominal 8%.
How monthly contributions are handled
Deposits are assumed to be made at the end of each month and earn the equivalent monthly rate m = (1 + r ÷ n)^(n ÷ 12) − 1 from then on. Their future value is c × ((1 + m)^months − 1) ÷ m, the standard annuity formula. This matches how recurring deposits and SIPs are usually illustrated; deposits made at the start of the month would earn one extra month of interest.
Limits
This is an arithmetic tool, not financial advice. It assumes a fixed rate for the whole period, no withdrawals, no fees and no tax on the interest. Real products may compound on different day counts, credit interest at specific dates, or change rates. Market-linked investments do not have a guaranteed rate at all, so treat any projected figure as an illustration.