How this compound interest calculator works
Future value = principal × (1 + annual rate ÷ compounds per year)^(compounds per year × years). Interest earned is future value minus principal.
Worked example
A ₹5 lakh principal at 8% for 10 years produces different results under annual, quarterly and monthly compounding because interest is credited at different intervals.
Assumptions
- The rate stays constant for the full period.
- Interest is reinvested at each compounding interval.
- No deposits or withdrawals occur after the start.
- The selected frequency applies throughout.
Limitations
- Real products can use exact dates, day-count rules and variable rates.
- Taxes, fees and penalties are excluded.
- More frequent compounding does not imply a better product overall.
Frequently asked questions
What is compound interest?
It is interest earned on principal plus previously credited interest.
How does compounding frequency affect value?
At the same nominal rate, more frequent compounding usually produces a slightly higher future value.
What frequencies are available?
Annual, half-yearly, quarterly and monthly.
Is this the same as an SIP calculator?
No. This calculator models one principal amount, while SIP adds recurring contributions.
Does it include tax?
No. Results are before tax and product charges.
Can I use it for an FD?
Use the dedicated FD calculator for its quarterly convention and tax input.
Are results guaranteed?
No. They depend entirely on the entered assumptions.