Use this compound interest calculator to see exactly how your money grows over time — whether you’re investing a lump sum, adding a fixed amount every month, or both. It uses the standard compound interest formula and lets you choose how often interest compounds (yearly, half-yearly, quarterly, or monthly), so you can compare how a bank FD, PPF, or mutual fund SIP might grow under different assumptions. To understand the concept behind the math, see our guide on the power of compounding.
Enter your investment details below — results update instantly.
How This Compound Interest Calculator Works
Compound interest grows your money because you earn returns not just on your original investment, but also on the interest it has already earned. The standard formula for a one-time (lump sum) investment is: A = P(1 + r/n)^(nt), where P is the principal, r is the annual interest rate, n is the number of times interest compounds per year, and t is the time in years. When you add a fixed monthly investment on top of a lump sum — similar to a mutual fund SIP — each monthly contribution compounds separately for the remaining time it stays invested, and the calculator above sums all of these along with the lump sum's growth.
Why Compounding Frequency Matters
The more frequently interest compounds, the faster your money grows, because each compounding period adds interest on a slightly larger base. For example, ₹1,00,000 at 12% for 10 years grows to about ₹3,10,585 compounded annually, but about ₹3,30,039 compounded monthly — a real difference of nearly ₹20,000 purely from compounding frequency. Bank fixed deposits typically compound quarterly, PPF compounds annually, and mutual fund returns are usually shown assuming daily or continuous compounding.
Compound Interest Example
This compound interest calculator makes it easy to see the difference contributions vs. growth make. Suppose you invest ₹1,00,000 upfront and add ₹5,000 every month, expecting a 12% annual return compounded monthly, for 10 years. Your total investment would be ₹1,00,000 + (₹5,000 × 120 months) = ₹7,00,000. With compounding, this would grow to roughly ₹12.6 lakh — meaning your money nearly doubles from growth alone, on top of what you put in. The longer the time horizon, the larger the share of your final corpus that comes from compounding rather than your own contributions — which is why starting early matters more than the amount you start with.
Compound Interest vs Simple Interest
| Factor | Simple Interest | Compound Interest |
|---|---|---|
| Interest earned on | Principal only | Principal + accumulated interest |
| Growth pattern | Linear | Exponential |
| Best for long-term wealth | No | Yes |
| Common examples in India | Some personal loans | FD, PPF, mutual funds, savings accounts |
For a deeper look at how compounding and interest rates work in the Indian banking system, see the Reserve Bank of India's public financial literacy resource, RBI Financial Education.
Related Calculators & Guides
- Power of Compounding Explained — the concept behind this calculator, with real examples
- SIP Calculator — focused purely on monthly SIP investing
- FD Calculator — fixed deposit maturity with quarterly compounding
- RD Calculator — recurring deposit maturity amount
- PPF Calculator — Public Provident Fund returns
- Lumpsum Calculator — one-time investment growth
Frequently Asked Questions
Which formula does this compound interest calculator use?
The formula is A = P(1 + r/n)^(nt), 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. Interest earned is A minus P.
How is compound interest different from a SIP calculator?
A pure SIP calculator only handles fixed monthly investments. This calculator combines a one-time lump sum investment with an optional recurring monthly investment, so you can model a lump sum, a SIP, or both together in one place.
Does compounding frequency really make a big difference?
Yes, especially over long periods and at higher interest rates. The difference between annual and monthly compounding is usually small in the first few years but becomes meaningful over a decade or more, as shown in the example above.
Is compound interest taxable in India?
Yes, in most cases. Interest from FDs, RDs, and savings accounts is taxed as per your income tax slab (with some exemption for savings account interest under Section 80TTA/80TTB). Returns from equity mutual funds are taxed as capital gains, not interest, and PPF interest is tax-free under the current EEE (Exempt-Exempt-Exempt) structure.
What is a realistic rate of return to assume?
For a bank FD or RD, use the actual rate offered (typically 6.5–7.5% currently). For equity mutual funds, many investors use 10–12% as a long-term historical average, though actual returns vary year to year and are never guaranteed. For PPF, use the current government-notified rate (7.1% as of 2026).
Disclaimer: This calculator is for illustration only and assumes a constant rate of return, which is realistic for FDs/RDs but not for market-linked investments like mutual funds, where actual returns fluctuate year to year. Please do not treat the results as a guarantee of future returns.
Reviewed by: MoneyPundit Team | Last updated: September 9, 2026
Data source: Standard compound interest mathematics; illustrative rate ranges referenced from RBI and major bank FD/RD rate publications. This calculator uses your own entered rate and does not assume any single bank's or fund's return.
Methodology: A = P(1 + r/n)^(nt) for the lump sum, plus each monthly contribution compounded individually at the equivalent monthly rate for the number of months it remains invested until maturity, summed together.
