Compound Interest Calculator
See what a deposit grows into, with any compounding frequency and optional monthly additions, plus a year-by-year table of the balance.
The compound interest formula
Compound interest pays interest on interest. Each period, the interest earned is added to the balance, and the next period’s interest is calculated on that larger balance. The standard formula is:
P = principal, r = annual rate, n = compounding periods per year, t = years
Indian bank fixed deposits typically compound quarterly, which is why this calculator defaults to quarterly. Savings accounts usually compound quarterly too, while many bonds pay simple interest, and index funds are better modelled with yearly compounding of an assumed return.
Does compounding frequency matter much?
Less than most people think. ₹1,00,000 at 8% for 10 years grows to ₹2,15,892 with yearly compounding, ₹2,20,804 with quarterly, and ₹2,22,535 with daily. The jump from yearly to quarterly is real but small; the jump from quarterly to daily is almost nothing. Rate and time dominate: the same money at 8% for 20 years exceeds ₹4.8 lakh. Time in the market is the multiplier.
The monthly addition option
Adding a fixed sum every month turns this into a savings planner: the tool compounds your starting amount and each monthly addition from the date it is added. This models recurring deposits and disciplined index investing well. The year-by-year table shows both what you put in and what the balance became, so you can see the crossover year when growth starts outpacing your own contributions, the point where compounding visibly takes over.
Worked example: FD vs index fund over 15 years
₹5 lakh in a fixed deposit at 7% compounded quarterly becomes about ₹14.2 lakh in 15 years. The same amount modelled at 11% with yearly compounding, a reasonable long-term equity index assumption, becomes about ₹23.9 lakh. The 4-point difference in rate turned into a ₹9.7 lakh difference in outcome, which is the entire argument for taking measured equity risk with long-horizon money. Run both scenarios above with your own figures; the year-by-year table shows exactly when the gap starts to widen dramatically.
Inflation: the compounding that works against you
Inflation compounds too. At 5.5% inflation, prices double roughly every 13 years, so ₹10 lakh of expenses today will need about ₹20 lakh in 13 years. A useful habit is to run this calculator once for your investment and once for inflation on your target expense, and compare the two future values. If your investment’s rate barely exceeds inflation, the real growth is the thin difference between two large numbers, which is precisely the situation with savings-account interest.
Frequently asked questions
What compounding frequency do Indian banks use for FDs?
Almost all Indian banks compound fixed deposits quarterly. Select Quarterly in the calculator to match your FD receipt. The maturity value should then match the bank’s figure to the rupee, before TDS.
What is the rule of 72?
A quick mental shortcut: divide 72 by the annual rate to estimate the years needed to double your money. At 8%, money doubles in about 9 years; at 12%, about 6 years. The calculator gives you the exact figure.
How is this different from the SIP calculator?
The SIP calculator assumes monthly investing into a market-linked fund and reports wealth gained on a monthly compounding convention. This tool is more general: any lumpsum, any compounding frequency, with optional monthly additions, matching bank deposit mathematics.
Is the interest here before or after tax?
Before tax. Interest on deposits is taxable as per your slab in India (with TDS above thresholds), and investment gains have their own tax rules. Compute the gross figure here, then apply your tax rate.