Compound Interest Calculator
Calculate compound vs simple interest, FD returns, effective annual rate and wealth growth over time.
Compound vs Simple Interest
Wealth Growth Over Time
Principal vs Interest Split
What is Compound Interest Calculator?
Compound interest is the process by which interest is added to the principal, and then future interest is calculated on the new, higher balance — interest earning interest. Albert Einstein allegedly called it the "eighth wonder of the world," and while the attribution may be apocryphal, the sentiment is accurate: compounding is the most powerful force in long-term wealth building.
The difference between simple interest and compound interest grows dramatically over time. With simple interest, you earn the same amount each year. With compound interest, your returns increase every year because the base grows. A 10% annual return on 10,000 gives 1,000 in year one with simple interest, but 1,100 in year two, 1,210 in year three, and so on with compound interest — the gap widens every year.
Altairys's Compound Interest Calculator shows you exactly how much your investment will grow over any time horizon, with any interest rate, for any compounding frequency (annually, semi-annually, quarterly, monthly, or daily). The results include a year-by-year breakdown table and a visual growth chart that illustrates the exponential curve of compound growth — making the abstract power of compounding visually tangible.
How to Use Compound Interest Calculator
- Enter principal amount
Type the initial investment or deposit amount.
- Set interest rate and period
Enter the annual interest rate and the investment duration in years.
- Choose compounding frequency
Select how often interest is compounded: annually, quarterly, monthly, or daily.
- Review the growth chart
See the year-by-year breakdown and visual chart showing how your money grows.
Key Benefits
See your investment growth plotted over time — the compounding curve made visible.
Detailed annual breakdown of principal, interest earned, and cumulative total.
Compare annual, quarterly, monthly, and daily compounding to see the difference.
Add regular monthly deposits to model a systematic investment plan (SIP).
Frequently Asked Questions
A = P(1 + r/n)^(nt), where A is the final 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 time in years.
Yes, more frequent compounding earns slightly more. Daily compounding earns slightly more than monthly, which earns slightly more than annually. The difference is small for short periods but significant over decades.
Simple interest is always calculated on the original principal. Compound interest is calculated on the growing balance — principal plus accumulated interest — so you earn interest on interest.
The effective annual rate (EAR) shows the actual annual return accounting for compounding frequency. A 12% rate compounded monthly has an EAR of 12.68% — the extra 0.68% is the benefit of monthly compounding.
Related Tools
Understanding Compound Interest
The Formula
A = P × (1 + r/n)^(nt)
P = Principal, r = annual rate, n = compounding periods/year, t = time in years. With monthly additions: each SIP instalment also compounds from its contribution date.
Effective Annual Rate (EAR)
EAR = (1 + r/n)^n − 1. It's the true annual return accounting for compounding. A 7% quarterly-compounded FD has an EAR of 7.19%, higher than the nominal rate.
Rule of 72
Divide 72 by your annual interest rate to estimate how many years it takes to double your money. At 7%, money doubles in ≈10.3 years. At 12%, it doubles in 6 years.
Compounding Frequency
The more frequently interest is compounded, the higher the effective return. Daily > Monthly > Quarterly > Semi-annual > Annual. Most Indian FDs compound quarterly.