Compound Interest Calculator
What Is Compound Interest?
Compound interest is interest earned on the original principal as well as on interest accumulated from previous compounding periods. Because previously earned interest can also earn interest, an investment can grow faster over time.
This Compound Interest Calculator estimates future value using the principal amount, annual interest rate, investment period and selected compounding frequency. Optional monthly contributions can also be included.
Compound Interest Formula
P = initial principal
r = annual interest rate as a decimal
n = number of compounding periods per year
t = investment period in years
Compound interest earned can be expressed as:
When regular monthly contributions are included, this calculator estimates their growth using an equivalent monthly growth rate based on the selected annual compounding convention.
Simple Interest vs Compound Interest
Simple interest is calculated on the original principal, whereas compound interest also takes previously accumulated interest into account.
| Feature | Simple Interest | Compound Interest |
|---|---|---|
| Interest calculated on | Original principal | Principal + accumulated interest |
| Growth pattern | Generally linear | Compounding growth |
| Effect of time | More predictable | Can become increasingly significant |
| Compounding frequency | Not applicable | Can affect final value |
Compounding Frequency Comparison
Compounding frequency determines how often interest is added to the balance. At the same nominal annual rate, different frequencies can produce different estimated final values.
| Compounding Frequency | Estimated Final Value | Estimated Interest |
|---|
Year-by-Year Compound Interest Growth
The table below shows the estimated balance at the end of each year and separates contributions from estimated interest growth.
| Year | Starting Balance | Contribution | Interest | Ending Balance |
|---|
How to Use the Compound Interest Calculator
- Enter your initial investment or principal amount.
- Enter an optional monthly contribution.
- Enter the expected annual interest rate.
- Enter the investment period in years and months.
- Select the compounding frequency.
- Click Calculate Compound Interest.
The calculator displays future value, total invested, estimated interest and wealth multiplier. It also provides a growth chart and year-by-year breakdown.
Compound Interest Calculation Examples
Example 1: ₹1,00,000 at 8% for 10 Years
Suppose you invest ₹1,00,000 at an annual interest rate of 8% for 10 years. Select the desired compounding frequency to estimate the final value and interest earned.
Example 2: ₹50,000 at 10% for 5 Years
If ₹50,000 is invested at 10% per year for five years, the estimated final value depends on the compounding frequency.
Example 3: Initial Investment Plus Monthly Contributions
Enter an initial investment together with a monthly contribution to estimate how regular additions may increase future value over time.
Frequently Asked Questions
What is compound interest?
What is the compound interest formula?
Is monthly compounding better than yearly compounding?
Can I calculate compound interest with monthly contributions?
What is the difference between simple and compound interest?
Is the result guaranteed?
Can I use this calculator for FD or savings calculations?
Does this calculator include taxes or inflation?
Disclaimer
This Compound Interest Calculator is provided for educational and estimation purposes only. Results are based on the inputs and assumptions provided by the user and should not be treated as guaranteed investment returns or financial advice. Actual returns may vary because of product terms, taxes, fees, market conditions and other factors.