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Compound interest calculator
Interest that earns interest. Choose how often it compounds and see how far ahead of simple interest it pulls.
The formula
A = P × (1 + r ÷ n)^(n × t)
P is the principal, r the yearly rate, n the number of compounding periods a year and t the number of years. ₹1,00,000 at 8% compounded quarterly for 10 years becomes about ₹2,20,804. Simple interest on the same terms gives ₹1,80,000, so compounding adds about ₹40,800.
Effective annual rate
More frequent compounding raises the real yearly return. 8% compounded quarterly is an effective 8.24% a year; compounded monthly it is 8.30%. Use the effective rate to compare deposits that compound differently.
Questions
Which Indian products compound?
Bank FDs usually compound quarterly, PPF and SSY yearly, and NSC yearly with interest reinvested. Mutual fund returns compound continuously in the fund’s value.
What is the rule of 72?
Divide 72 by the yearly rate to estimate how many years money takes to double. At 8%, about nine years.