About compound interest calculator
Compound interest means you earn interest on your interest. Over long periods this makes a big difference compared with simple interest.
Formula
A = P × (1 + r/n)^(n×t), where n is how many times a year interest compounds. ₹1,00,000 at 8% compounded yearly grows to about ₹2,15,892 in 10 years.
What helps most
- A longer time. The growth accelerates in later years.
- A higher rate.
- More frequent compounding, though the effect is smaller than the other two.
Rule of 72
Divide 72 by the annual return to estimate years to double your money. At 8% it takes about 9 years.
A worked example
₹2 lakh at 7 percent compounded monthly grows to about ₹2.84 lakh in 5 years, an interest of ₹83,500. Compounded yearly it would reach about ₹2.81 lakh, so more frequent compounding helps only slightly. The extra years matter far more.
Time beats timing
Starting 10 years earlier with the same monthly amount usually beats investing more later. This is why financial planners say to begin as soon as you can.
