Finance Guide
Compound Interest Calculator Guide — How Compounding Works India
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Instant result with effective rate and comparison vs simple interest.
Open Calculator →What is Compound Interest?
Compound interest means earning interest on your interest — not just the original principal. Albert Einstein reportedly called it the "eighth wonder of the world." Even a small difference in rate or time creates dramatic differences over decades.
A = P × (1 + r/n)^(n×t)
A = Final Amount | P = Principal | r = Annual rate
n = Compounding frequency/year | t = Time in years
Example: Rs.1 lakh at 12% for 10 years (annual) = Rs.3,10,585
Compound vs Simple Interest
| Rs.1 Lakh @ 12% | Simple Interest | Compound Interest |
|---|---|---|
| 5 years | Rs.1,60,000 | Rs.1,76,234 |
| 10 years | Rs.2,20,000 | Rs.3,10,585 |
| 20 years | Rs.3,40,000 | Rs.9,64,629 |
| 30 years | Rs.4,60,000 | Rs.29,95,992 |
Rule of 72 — Quick Mental Math
Divide 72 by the interest rate to find how many years it takes to double your money:
- 72 ÷ 12% = 6 years to double at 12% return
- 72 ÷ 7% = 10.3 years to double at 7% FD rate
- 72 ÷ 4% = 18 years at savings account rate
📌 Key insight: Starting early is the most powerful factor. Rs.1 lakh at 12% for 30 years = Rs.29.96 lakh. But for 20 years = Rs.9.65 lakh. Those 10 extra years tripled the wealth!
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