💹
Enter Details
Currency
Principal Amount₹1,00,000
Annual Interest Rate (%)10.0%
Time Period10 Years
Compounding Frequency
Effective Annual Rate (EAR): 10.381%
↺ Reset to defaults
Compound vs Simple Interest
📈 Compound Interest
Principal ₹1,00,000
Interest ₹1,68,506
Total ₹2,68,506
EAR 10.381%
📊 Simple Interest
Principal ₹1,00,000
Interest ₹1,00,000
Total ₹2,00,000
Extra from CI +₹68,506
📊
Year-by-Year Growth
YearPrincipalInterest EarnedTotal ValueGrowth
Year 1₹1,00,000+₹10,381₹1,10,381
41%
Year 2₹1,00,000+₹21,840₹1,21,840
45%
Year 3₹1,00,000+₹34,489₹1,34,489
50%
Year 4₹1,00,000+₹48,451₹1,48,451
55%
Year 5₹1,00,000+₹63,862₹1,63,862
61%
Year 6₹1,00,000+₹80,873₹1,80,873
67%
Year 7₹1,00,000+₹99,650₹1,99,650
74%
Year 8₹1,00,000+₹1,20,376₹2,20,376
82%
Year 9₹1,00,000+₹1,43,254₹2,43,254
91%
Year 10₹1,00,000+₹1,68,506₹2,68,506
100%
Total Value₹2,68,506
Principal
Interest
💰
Principal Amount
₹1,00,000
📈
Interest Earned
₹1,68,506
💹
Total Amount
₹2,68,506
Compound Interest Formula
A = P × (1 + r/n)^(n×t)
A = Final Amount
P = Principal
r = Annual Rate (decimal)
n = Compounding Frequency
t = Time in Years
💡Quick Compounding Tips
Rule of 72. Divide 72 by your rate to estimate doubling time. At 8% your money doubles in ~9 years.
Frequency matters. Monthly compounding yields more than annual at the same rate. Higher frequency = higher return.
Start early. ₹1 lakh at 10% for 30 years grows to ₹17.4 lakh. Starting 10 years later gives only ₹6.7 lakh.
Never interrupt. Withdrawing mid-way resets the compounding clock. Let it run uninterrupted for maximum growth.
Reinvest returns. Always reinvest interest or dividends — this is what activates the compounding snowball effect.
Inflation erodes. At 6% inflation, ₹1 lakh today is worth ₹55,000 in 10 years. Your returns must beat inflation.
Tax impacts returns. Post-tax compounding is what matters. A 10% return taxed at 30% leaves only 7% effective return.
Consistent contributions. Adding even small amounts monthly to a compounding investment dramatically accelerates growth.

What is Compound Interest?

Compound interest is interest calculated on both the original principal and the interest accumulated from previous periods. Unlike simple interest — which is calculated only on the principal — compound interest grows exponentially because each period's interest is added to the base, and the next period earns interest on a larger amount. This snowball effect is the fundamental principle behind long-term wealth creation. See how it applies to regular investments with our SIP Calculator or to fixed deposits with our FD Calculator.

The Compound Interest Formula

A = P × (1 + r/n)^(n×t) — where A is the final amount, P is the principal, r is the annual interest rate as a decimal, n is the number of compounding periods per year and t is the time in years. The interest earned is simply A − P. The effective annual rate (EAR) — what you actually earn when compounding is more frequent than annually — is calculated as EAR = (1 + r/n)^n − 1.

Compound Interest vs Simple Interest

For a ₹1 lakh investment at 10% p.a. over 20 years: simple interest gives ₹3 lakh total (₹2 lakh interest). Compound interest (annual) gives ₹6.73 lakh total — more than double. Over longer periods the gap widens dramatically. This calculator shows both side by side so you can see exactly how much compounding adds. Compare with our Simple Interest Calculator for the full picture.

The Rule of 72 — Quick Mental Maths

Divide 72 by your annual interest rate to estimate how many years it takes to double your money: at 6% → 12 years; at 8% → 9 years; at 12% → 6 years; at 18% → 4 years. It is an approximation, but remarkably accurate for rates between 6% and 20%.

Verified by ToollyX Team · Last updated June 2026

Frequently Asked Questions

Disclaimer: Results are calculated using the standard compound interest formula and are for educational and planning purposes only. Actual returns on investments are market-linked and may differ.