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Inputs
principal amount, interest rate, tenure, compounding frequency
Kiwi money calculator
Compound Interest Calculator
See how a lump sum really grows. Enter your principal, interest rate, tenure, and how often interest compounds to see the maturity value and interest earned.
CALCULATOREstimate
Lump sum invested today (₹1,000 to ₹1,00,00,000).
Annual interest rate assumption (1% to 50%).
Investment duration (1 to 30 years).
How often interest is added to the principal.
Principal amount
Interest earned
Compound interest breakdown: principal amount ₹1.00L, interest earned ₹61,051, maturity amount ₹1.61L.
38%interest
Maturity amount
₹1.61L
Principal amount
₹1.00L
Interest earned
₹61,051
FEATURES
Everything you need in one place
Get the number instantly, understand the formula, and know what changes it — all without leaving the page.
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Outputs
maturity amount, principal amount, interest earned
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Education
A compound interest calculator estimates how a lump sum grows over time when interest is added back to the principal and itself starts earning interest, based on the principal, rate, tenure, and compounding frequency.
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Kiwi fit
Use payment and credit-card context only when it helps the calculator intent.
HOW TO USE
Get your result in seconds
1
Enter your principal amount
Type the lump sum you plan to invest today, from Rs 1,000 up to Rs 1,00,00,000. This is the one-time amount that will start earning interest on itself as soon as compounding begins.
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Set the interest rate, tenure, and compounding frequency
Enter the annual interest rate you expect (typically 6% to 8% for FDs, 7% to 8% for PPF and Sukanya Samriddhi, or higher for market-linked instruments), choose the investment duration in years, and select how often interest compounds, from yearly down to daily.
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Read your maturity value and interest earned
The calculator instantly shows your maturity amount, your original principal, and the interest earned, split visually in the donut chart. Change the compounding frequency alone to see how much more the same rate can earn you when it compounds more often.
FORMULA
Compound interest logic
A = P x (1 + r/n)^(n x t)
P is principal, r is the annual rate, n is compounding periods per year (Yearly = 1, Half-Yearly = 2, Quarterly = 4, Monthly = 12, Daily = 365), and t is tenure in years. The same nominal rate pays more the more often it compounds, so always compare tools using the same frequency assumption.
- The interest rate is assumed constant for the full tenure; real product rates can reset, change, or vary by issuer.
- TDS, income tax on interest, and premature withdrawal penalties are not factored into the result.
- Compounding frequency here is a modelling choice; confirm your actual bank or scheme's stated frequency before comparing products.
LEARN MORE
Know before you decide
Simple Interest vs Compound Interest: Why the Gap Widens With Time
On a Rs 1,00,000 principal at 10% per annum, simple and compound interest look almost identical after year one, only a few hundred rupees apart. But run the same numbers for 20 years and simple interest gives you Rs 2,00,000 in total interest while compound interest gives you over Rs 5,72,000, nearly triple. Most calculators only show a 2 to 3 year example, which hides the fact that compounding's real advantage only becomes dramatic over long horizons like retirement or a child's education fund.
The Rule of 72: A Mental Shortcut to Estimate Doubling Time
Divide 72 by your annual interest rate to estimate how many years it takes your money to double under compounding. At a 7% FD rate, money doubles in roughly 10.3 years; at a 12% equity CAGR, it doubles in about 6 years. This rule is a quick sanity check before you trust any calculator's output, and it explains why even a 2 to 3 percentage point difference in rate can change your effective wait time by years.
Nominal Rate vs Effective Annual Rate: Why Compounding Frequency Changes Your Return
A 10% nominal annual rate compounded monthly actually yields an effective annual return of about 10.47%, and compounded daily it climbs to roughly 10.52%, purely because interest is credited and starts earning its own interest more often. Banks are required to disclose this effective yield for fixed deposits, but many generic calculators let you pick a compounding frequency from a dropdown without explaining why the result changes. Toggling the frequency in this calculator shows you that effect directly on the same principal and nominal rate.
Where Compound Interest Actually Shows Up in Indian Savings Products
Bank fixed deposits and recurring deposits compound quarterly as per RBI-standard practice, while the Public Provident Fund and Sukanya Samriddhi Yojana compound annually on rates set by the government each quarter. Corporate and company fixed deposits often compound annually or cumulatively at maturity, and typically offer 1 to 2 percentage points more than bank FDs for taking on higher credit risk. Mutual fund returns are usually quoted as CAGR, which behaves like compound interest mathematically but reflects market-linked, non-guaranteed growth rather than a fixed contractual rate.
Tax on Compound Interest: Why It's Taxed Every Year, Not Just at Maturity
Interest earned on fixed deposits, corporate deposits, and similar instruments is taxable as 'Income from Other Sources' on an accrual basis each financial year, even if the deposit is cumulative and pays out only at maturity. Banks deduct TDS at 10% once interest from a single bank crosses Rs 40,000 in a year (Rs 50,000 for senior citizens) under Section 194A. This is a key reason PPF and Sukanya Samriddhi, both fully tax-free (EEE) under Section 80C, often beat a taxable FD of a similar headline rate on a post-tax basis.
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FAQ
Frequently asked questions
What is compound interest?
Compound interest is interest calculated on both the original principal and the interest already accumulated from prior periods. Unlike simple interest, which is always calculated only on the original principal, compound interest means your interest itself starts earning interest, which is why investments and deposits grow faster the longer they are left untouched.
What is the formula for calculating compound interest?
The standard formula is A = P x (1 + r/n)^(n x t), where A is the final maturity amount, P is the principal, r is the annual interest rate (as a decimal), n is the number of times interest compounds per year, and t is the tenure in years. The interest earned is simply A minus P. For example, Rs 1,00,000 at 10% per annum compounded yearly for 5 years grows to approximately Rs 1,61,051, an interest of about Rs 61,051.
What is the difference between simple interest and compound interest?
Simple interest is calculated only on the original principal for the entire tenure, so it grows in a straight line. Compound interest is calculated on the principal plus all previously earned interest, so it grows exponentially. Over short periods the two look similar, but over 15 to 20 years or more, compound interest can produce nearly double the total interest of simple interest on the same principal and rate.
How does compounding frequency change the final maturity amount?
The more frequently interest compounds within a year, at the same nominal annual rate, the higher your effective return, because interest is credited and starts earning its own interest sooner. For example, Rs 1,00,000 at 10% per annum for 5 years grows to about Rs 1,61,051 with yearly compounding, but to about Rs 1,64,531 with monthly compounding and about Rs 1,64,861 with daily compounding, purely from the frequency change.
What is the Rule of 72 and how do I use it?
The Rule of 72 is a quick mental shortcut to estimate how long an investment takes to double: divide 72 by the annual interest rate. At 8% per annum, money roughly doubles in 9 years (72 divided by 8); at 12%, it doubles in about 6 years. It is an approximation, most accurate for rates between roughly 6% and 15%, and is a useful sanity check before you trust a detailed calculator's output.
Which Indian investments actually pay compound interest?
Bank and post office fixed deposits and recurring deposits compound quarterly, the Public Provident Fund and Sukanya Samriddhi Yojana compound annually at government-set rates, and corporate or company fixed deposits typically compound annually or cumulatively at maturity. Savings accounts also technically compound, usually quarterly, but at much lower rates. Equity and debt mutual funds do not pay a fixed compound rate; their CAGR mimics compounding mathematically but reflects market performance, not a guaranteed contract.
Is interest earned through compounding taxable in India?
Yes, interest from fixed deposits, recurring deposits, and corporate deposits is fully taxable as 'Income from Other Sources' at your income tax slab rate, and must be declared every financial year on an accrual basis even if the deposit pays out only at maturity. Banks deduct TDS at 10% once interest from a single bank exceeds Rs 40,000 in a year (Rs 50,000 for senior citizens). PPF and Sukanya Samriddhi Yojana are exceptions: both the interest and maturity proceeds are completely tax-free under the EEE structure.
What is the difference between compound interest and the CAGR shown on mutual funds?
CAGR, or Compound Annual Growth Rate, uses the exact same mathematical formula as compound interest to express a mutual fund's or stock's average annual return over a period. The key difference is that a compound interest rate on an FD or PPF is fixed and guaranteed by contract, while a mutual fund's CAGR is a historical average of market-linked returns that fluctuated year to year and is never guaranteed to repeat in the future.
What is a realistic interest rate to use in this calculator?
For bank and post office fixed deposits, use 6.5% to 8%; for the Public Provident Fund and Sukanya Samriddhi Yojana, use the current government-notified rate, typically around 7.1% to 8.2%; for corporate fixed deposits, use 7.5% to 9%. If you are modelling equity mutual fund growth, a long-term historical average of 10% to 12% is commonly used, though equity returns are never guaranteed and can vary significantly year to year.
Does more frequent compounding always mean drastically higher returns?
No. The jump from yearly to quarterly compounding meaningfully increases your effective return, but the incremental gain from quarterly to monthly, or monthly to daily, is much smaller and mathematically approaches a limit called continuous compounding. In practice, the difference between monthly and daily compounding on a typical FD is usually well under half a percentage point in effective yield, so the compounding frequency your bank uses matters far less than the headline interest rate itself.
Can I use this calculator for a recurring monthly investment instead of a one-time lump sum?
No, this calculator is built for a single lump sum principal invested once at the start of the tenure. If you are depositing a fixed amount every month, such as into a Recurring Deposit or a SIP, use Kiwi's dedicated RD calculator instead, which accounts for each monthly instalment earning interest for a different length of time.
What common mistakes should I avoid when using a compound interest calculator?
The most common mistake is entering the compounding frequency inconsistently with the rate, for example assuming monthly compounding while mentally picturing a yearly-quoted rate without adjusting expectations. Another frequent error is ignoring taxation entirely: a 7% FD taxed at a 30% slab rate has a post-tax return of roughly 4.9%, which is very different from the pre-tax number the calculator shows. Always treat the output as a pre-tax estimate and cross-check the compounding frequency your actual bank or scheme uses before comparing products.
Calculator outputs are estimates for education and planning. They should not be presented as financial advice, approval, guaranteed savings, or final payable amounts.