Whether you are saving for retirement, building an emergency fund or investing for a long-term goal, this compound interest calculator shows how your money may grow. Enter a starting balance, regular monthly contribution, expected return and investment period, then refine the estimate with compounding frequency, inflation and tax. The result separates your own contributions from investment growth, so you can see how time and small changes in the return rate affect the final balance.
The annual rate is divided by the number of compounding periods per year.
Each period, interest is added to the balance, so the next period earns interest on a larger amount.
More frequent compounding at the same nominal rate gives a slightly higher return — the effective annual rate expresses that as a single yearly figure.
Monthly contributions are added after each month's growth; tax applies to positive gains and inflation adjusts the final balance into today's purchasing power.
Amount: A = P(1 + r/n)^(n × t)
With regular contributions: A = P(1 + i)^m + PMT × ((1 + i)^m − 1) ÷ i
Effective annual rate: EAR = (1 + r/n)^n − 1
n: Number of compounding periods per year
The compound interest calculator projects how a starting sum, plus optional monthly contributions, grows when interest is added to the balance and then earns interest itself. You choose the rate, the number of years and how often interest compounds. You can also enter a tax rate on the gains and an inflation rate, to see what the final balance is worth after tax and in present-day rupees.
Compounding drives most long-term savings in India: bank fixed deposits that compound quarterly, recurring deposits, provident funds and reinvested mutual fund returns. The calculator shows the split between your own contributions and the interest earned, and how much of the gain is eaten by tax and inflation. That makes it useful both for a one-time deposit and for a regular saving plan.
1. Write the annual rate as a decimal r and the compounding frequency n per year.
2. Without contributions, the amount is A = P × (1 + r ÷ n)^(n × t).
3. With monthly contributions, first find the equivalent monthly rate i = (1 + r ÷ n)^(n ÷ 12) − 1.
4. Grow the balance month by month: new balance = old balance × (1 + i) + monthly contribution, for 12t months. The closed form is P(1 + i)ᵐ + PMT × ((1 + i)ᵐ − 1) ÷ i with m = 12t.
5. Interest = final amount − (P + total contributions). Subtract tax at your chosen rate on this gain.
6. To express the result in present-day rupees, divide the after-tax amount by (1 + inflation ÷ 100)ᵗ.
In each compounding period, interest is calculated on the whole balance, which includes interest from earlier periods. So the balance is multiplied by the same factor every period rather than increased by the same amount. After k periods, the principal has been multiplied by (1 + r ÷ n)ᵏ. This is exponential growth. Over short periods it looks almost linear, but over decades the curve bends sharply upward. At 7.5% compounded quarterly, money roughly doubles in about 9.3 years and quadruples in about 18.7.
Contributions arrive monthly, but interest may compound quarterly or yearly. The calculator reconciles the two by converting the stated compounding into an equivalent monthly rate, (1 + r ÷ n)^(n ÷ 12) − 1. Applying that monthly rate twelve times gives exactly the same growth over a year as the chosen compounding. Each contribution is added at the end of its month, after that month's growth. Actual deposit products may credit interest differently, so small differences from a bank's statement are normal.
The tax option applies your chosen rate once, to the total gain at the end. In reality, interest on bank deposits is usually taxed every year as it accrues, which reduces the amount left to compound and lowers the final figure further. The inflation option divides the after-tax balance by (1 + inflation)ᵗ to show its value in present-day purchasing power. If your after-tax return is close to inflation, your real wealth barely grows, even though the rupee balance rises a lot.
Farida puts ₹2,00,000 into a quarterly-compounding deposit plan at 7.5% a year and adds ₹5,000 every month for 15 years. She wants to see the result in present-day rupees, assuming 5% inflation.
Answer: Future balance after tax ₹22,58,496; Total invested ₹11,00,000; Net interest earned ₹11,58,496
Using the effective annual rate where the formula expects the nominal rate, or the reverse.
Ignoring tax on interest, which is charged each year for bank deposits.
Reading the future rupee figure as if it had today's purchasing power.
Assuming a fixed return on market-linked investments that can fall.
Entering the compounding frequency wrongly, for example yearly for a deposit that compounds quarterly.
Projecting the maturity value of a fixed deposit with regular top-ups.
Planning a long-term savings goal and checking it against inflation.
Comparing products with different compounding frequencies.
Showing students how compounding differs from simple interest.
Why does quarterly compounding give more than yearly?
Because your interest is added sooner, and then it starts earning interest too. At a stated rate of 12%, yearly compounding gives you 12%. Quarterly compounding gives you about 12.55%, because of this extra effect.
What is the effective annual rate?
It is the single yearly rate that gives you the same result as the more frequent compounding you chose. It is the fairest way to compare two products that compound at different times.
What is the rule of 72?
A quick shortcut: divide 72 by your yearly return to guess how many years it takes for your money to double. At 12%, this is about six years. It is only an estimate, not an exact answer.