The ten-year head start
Ravi invests half as much as Meera and still retires with more, because he started ten years earlier.
FINANCE TOOL
Compound Interest Calculator
Explore how deposits, contributions and an assumed return could grow over time.
- ₹60.85 L
- 20-year projection
- 79%
- Growth share
- ~10
- Crossover year
Calculator inputs
₹1,00,000
12% a year
%
Illustrative annual return, not a guaranteed rate.
20 years
years
₹5,000
0%
% a year
Funded by future raises, so it costs nothing today.
6%
%
Only used to restate the result in today's money.
- Projected balance
- ₹60,84,995
- Total contributed
- ₹13,00,000
- Compound growth
- ₹47,84,995
- Real value today
- ₹18,97,330
After 20 years at 12%
Principal + deposits
78.6% of the final balance
Inflation-adjusted at 6%
Growth chart
20-year compound growth
Year 20
₹60.85 L
₹13 L in, ₹47.85 L earned
20 / 20
Milestones along the way
Year-by-year stacked bars
Contributions vs growth
Final split — year 20
79% growth · 21% contributed
- Compound growth₹47,84,995 79%
- Contributions₹13,00,000 21%
Inflation comparison
Nominal vs real value
- Nominal balance
- ₹60,84,995
- Inflation-adjusted (real)
- ₹18,97,330
- Total contributed
- ₹13,00,000
At 6% inflation, ₹60,84,995 is worth about ₹18,97,330 in today's money — 69% of the headline figure. That is still 19× your opening deposit in real terms.
Scenarios
Compare return assumptions
The same plan at a lower and a higher rate. Nobody can promise any of the three.
Small changes, different futures
The compounding advantage
The same deposits at the same rate, with and without interest earning interest.
Simple interest₹29,86,000
Interest paid only on what you deposited.
Compound interest₹60,84,995
Interest paid on your deposits and on past interest.
Over 20 years compounding adds ₹30,98,995 that simple interest never would. Same deposits, same rate — the only difference is that the interest was left in to earn interest of its own.
Case studies
Six situations that show what compounding does — and what it does to you when it is pointed the other way.
Getting to the first ₹1 crore
₹15,000 a month for 20 years at 12% grows to about ₹1.5 crore, and three-quarters of it is interest.
The lump sum you forgot about
₹10 lakh left alone for 25 years at 10%, with nothing added, becomes about ₹1.2 crore.
Raising your investment with your salary
Starting at ₹10,000 a month and adding 10% a year roughly doubles the 20-year outcome.
The fixed deposit that stands still
₹20 lakh at 7% for 15 years looks like it triples — after 6% inflation it barely grows at all.
Compounding pointed at you
A ₹1 lakh credit card balance at 36% a year, left unpaid, becomes nearly ₹5.9 lakh in five years.
Lessons
How compound interest actually works
Interest on interest is the whole trick
Simple interest pays you only on what you deposited. Compound interest pays you on what you deposited plus every rupee of interest it has already paid you. In year one the two are identical, which is why the difference is invisible early and enormous late.
The crossover year
At some point your cumulative interest overtakes everything you have put in, and the account starts earning more per year than you contribute. That year is marked on your chart. Reaching it is the real goal; everything after it is momentum.
Rule of 72
Divide 72 by the annual return to get the rough number of years for money to double. At 12% that is six years; at 6% it is twelve. It is arithmetic you can do in your head, and it is accurate enough to sanity-check any product being sold to you.
Frequency matters less than you think
Moving from yearly to daily compounding on the same 12% headline rate adds well under one percentage point of effective return. Switching the rate from 8% to 12%, or adding five years, changes the outcome far more. Do not pay for frequency.
Year by year
| Year | Added | Interest | Balance | Total in | In today's money |
|---|---|---|---|---|---|
| 1 | ₹60,000 | ₹16,729 | ₹1,76,729 | ₹1,60,000 | ₹1,66,726 |
| 2 | ₹60,000 | ₹26,460 | ₹2,63,189 | ₹2,20,000 | ₹2,34,238 |
| 3 | ₹60,000 | ₹37,426 | ₹3,60,615 | ₹2,80,000 | ₹3,02,779 |
| 4 | ₹60,000 | ₹49,782 | ₹4,70,397 | ₹3,40,000 | ₹3,72,598 |
| 5 | ₹60,000 | ₹63,705 | ₹5,94,102 | ₹4,00,000 | ₹4,43,947 |
| 6 | ₹60,000 | ₹79,394 | ₹7,33,495 | ₹4,60,000 | ₹5,17,085 |
| 7 | ₹60,000 | ₹97,072 | ₹8,90,567 | ₹5,20,000 | ₹5,92,278 |
| 8 | ₹60,000 | ₹1,16,993 | ₹10,67,560 | ₹5,80,000 | ₹6,69,800 |
| 9 | ₹60,000 | ₹1,39,440 | ₹12,67,000 | ₹6,40,000 | ₹7,49,935 |
| 10 ✦ | ₹60,000 | ₹1,64,734 | ₹14,91,734 | ₹7,00,000 | ₹8,32,977 |
| 11 | ₹60,000 | ₹1,93,236 | ₹17,44,970 | ₹7,60,000 | ₹9,19,228 |
| 12 | ₹60,000 | ₹2,25,353 | ₹20,30,322 | ₹8,20,000 | ₹10,09,008 |
| 13 | ₹60,000 | ₹2,61,542 | ₹23,51,865 | ₹8,80,000 | ₹11,02,646 |
| 14 | ₹60,000 | ₹3,02,322 | ₹27,14,187 | ₹9,40,000 | ₹12,00,487 |
| 15 | ₹60,000 | ₹3,48,273 | ₹31,22,460 | ₹10,00,000 | ₹13,02,894 |
| 16 | ₹60,000 | ₹4,00,053 | ₹35,82,513 | ₹10,60,000 | ₹14,10,243 |
| 17 | ₹60,000 | ₹4,58,399 | ₹41,00,912 | ₹11,20,000 | ₹15,22,933 |
| 18 | ₹60,000 | ₹5,24,145 | ₹46,85,057 | ₹11,80,000 | ₹16,41,381 |
| 19 | ₹60,000 | ₹5,98,229 | ₹53,43,286 | ₹12,40,000 | ₹17,66,026 |
| 20 | ₹60,000 | ₹6,81,709 | ₹60,84,995 | ₹13,00,000 | ₹18,97,330 |
The compound interest formula explained
For one initial deposit and no additional contributions, the future balance is A = P(1 + r/n)^(nt). P is the principal, r is the annual nominal rate expressed as a decimal, n is the number of compounding periods per year and t is the number of years. A includes the principal; compound interest alone is A minus P.
A rate of 10% becomes 0.10 in the formula. Yearly compounding uses n = 1, monthly uses n = 12 and daily uses n = 365. This assumes a constant rate, reinvested interest and no withdrawals, taxes or fees. It is a mathematical projection, not a promised investment return.
Worked example: 100,000 invested for ten years
With an initial deposit of 100,000, a hypothetical 10% annual rate, yearly compounding and no further contributions, the calculation is 100,000 x (1.10)^10. The projected balance is 259,374.25, including 159,374.25 of interest before tax or fees.
At the same rate under simple interest, the interest would be 100,000 x 0.10 x 10 = 100,000. The total would be 200,000. The difference of 59,374.25 comes from reinvesting interest rather than earning interest only on the initial deposit. The arithmetic is the same regardless of the currency selected.
Regular contributions and an annual step-up
A savings plan with recurring deposits needs more than the single-deposit formula. Each contribution has a different amount of time to grow. This calculator projects monthly steps, adds contributions at the start of the selected period and then applies growth. Yearly contributions arrive in the first month of each year.
An annual step-up increases the contribution amount, not the investment return. For example, a monthly contribution of 5,000 with a 10% step-up becomes 5,500 per month in year two and 6,050 in year three. A deposit made at the end of a period has less time to earn than the start-of-period assumption used here.
Compounding frequency, inflation and real-world returns
The compounding frequency and contribution frequency describe different things: one governs how the assumed annual rate grows the balance; the other governs when new money is added. A nominal 12% rate compounded monthly has an effective annual rate of about 12.68%. The model converts the chosen compounding frequency into an equivalent monthly growth rate.
The inflation-adjusted balance expresses the result in today's purchasing power by dividing the future balance by (1 + inflation rate)^years. Inflation is an assumption too, and this adjustment does not deduct taxes, product charges or management fees.
Real investment returns can vary and include losses, while this model uses a constant non-negative rate. Compare more than one plausible scenario and check the terms of the actual account or investment. Changing the displayed currency changes formatting, not exchange rates or the underlying return assumption.
Questions people ask
For a single deposit it is A = P(1 + r/n)^(nt), where P is the initial amount, r is the annual rate as a decimal, n is the compounding frequency per year and t is the number of years. Interest earned is A minus P. This calculator uses monthly projection steps to also handle contributions and annual increases in those contributions.