What is compound interest?

It is interest calculated on both the original amount and on the interest already earned. Because each period's growth joins the base for the next period, the balance rises at an accelerating pace even though the rate never changes.

How is compound interest with regular contributions calculated?

The starting amount is compounded forward for the full term, and each contribution is compounded forward for the periods remaining after it is made. Adding the two gives the final value: A = P(1 + i)ⁿ + C × (((1 + i)ⁿ − 1) ÷ i) × (1 + i).

Does contribution frequency change the result?

Yes, but modestly. Contributing monthly rather than yearly puts money to work sooner and compounds it more often, which raises the final figure by a small percentage. The comparison table on this page shows the difference for your own numbers.

What is the difference between this and the SIP calculator?

The SIP calculator handles a monthly contribution with no starting amount. This one handles a starting amount, a contribution, or both, at monthly, quarterly or yearly frequency. Given the same monthly inputs and a zero starting amount, the two produce identical figures.

Is compound interest taxable?

How the growth is taxed depends on the product. Interest from deposits is generally added to your income and taxed at your slab rate each year, while gains from mutual funds are taxed on redemption under capital gains rules. This calculator reports pre-tax figures either way.

What happens if I set the contribution to zero?

The calculator reduces to plain compound growth on the starting amount, which is the same thing the lumpsum calculator does. Setting the starting amount to zero instead gives you a pure contribution plan.

Investment · FINANCIAL TOOLS

Compound Interest Calculator

Combine a starting amount with regular contributions to see how compounding builds on both.

Understand the calculation

Calculation logic, formula, example and guardrails behind the estimate.

How it works

Each period, your contribution is added and then the whole balance grows by the periodic rate. That growth becomes part of the balance the next period grows on, which is the entire mechanism behind compounding — interest earning interest.

The annual rate is divided by the number of periods per year, so a 12% annual rate becomes 1% a month, 3% a quarter or 12% a year. Contributions and compounding use the same frequency, which keeps money from being credited with growth for time it was not invested.

More detail

Total invested is the initial amount plus every contribution. Estimated returns are whatever the final balance exceeds that by — so the split you see is exact, not apportioned.

With monthly contributions and no starting amount, this produces exactly the same figure as the SIP calculator, because both use the same start-of-period convention. That is a deliberate consistency check rather than a coincidence.

If you contribute monthly and have no starting amount, the SIP calculator is the simpler tool.

To see what the projected balance would be worth in today's money, run it through the inflation calculator.

Formula

A = P(1 + i)ⁿ + C × ( ((1 + i)ⁿ − 1) ÷ i ) × (1 + i)

The first term compounds the starting amount; the second is the future value of the contributions, made at the start of each period. When i is zero the second term becomes simply C × n.

A: Final value — the projected balance at the end
P: Principal — the initial amount invested
C: The contribution made every period
i: Rate per period — the annual rate divided by the number of periods per year, as a decimal
n: Total number of periods (years × periods per year)

Worked example

₹1,00,000 to start, ₹10,000 added every month, 12% assumed annual return, 10 years.

01Rate per period (i)12% ÷ 12 = 1% = 0.01
02Periods (n)10 × 12 = 120
03Growth on the initial amount₹1,00,000 × 1.01¹²⁰ ≈ ₹3,30,039
04Future value of contributions₹10,000 × ((1.01¹²⁰ − 1) ÷ 0.01) × 1.01 ≈ ₹23,23,391
05Total invested₹1,00,000 + ₹12,00,000 = ₹13,00,000
06Final value (A)≈ ₹26,53,430
07Estimated returns≈ ₹13,53,430

Slightly more than half the projected balance is compounding rather than contribution. Note that the ₹1,00,000 starting amount more than triples while the ₹12,00,000 of contributions roughly doubles — the starting amount had the full ten years to work.

Important considerations

01
Frequency matters less than most people expect
Moving from yearly to monthly compounding at the same nominal rate changes the outcome by a few percent over a decade. Moving from ten years to twenty changes it by far more. Time is the lever worth pulling.
02
Nominal rate and effective rate are different things
A 12% nominal rate compounded monthly is an effective annual rate of about 12.68%. When comparing products, compare effective rates or you will be comparing different things.
03
Deposits and market investments need different assumptions
If you are modelling a recurring deposit, use the contracted rate and remember interest is taxable annually. If you are modelling a mutual fund, the rate is an assumption and the value can fall.
04
Starting amount and contributions do different jobs
The initial amount benefits from the full term, while the last contribution benefits from almost none. That is why adding to an existing pot early beats adding a larger amount later.
05
The result is in future rupees
A projected balance a decade out buys noticeably less than the same number does today. Convert it with the inflation calculator before deciding whether it is enough.

Limitations

It applies one constant rate for the whole term, which no market-linked investment delivers.
It assumes every contribution is made, in full and on time, for the entire period.
Results are nominal and pre-tax; interest on deposits is taxable at your slab rate and capital gains have their own treatment.
It cannot model a contribution that changes over time — the step-up SIP calculator handles that case.

Frequently asked questions

Common questions about the compound interest calculator and the assumptions behind it.

Next useful checks

Move from this result to the next decision without hunting through the full calculator list.

Goal-Based SIP CalculatorTurn a target amount into a monthly investment.SIP vs Lumpsum CalculatorCompare investing all at once against monthly investing.CAGR CalculatorConvert start and end values into an annual return.

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Disclaimer

This calculator is provided for general information and planning only. It is not investment, tax or legal advice, and it does not take your personal circumstances into account. Outputs are estimates based on the assumptions stated on this page, exclude taxes and charges unless said otherwise, and market-linked returns are not guaranteed — the value of investments can fall as well as rise. Lending terms, rates and eligibility are decided by the lender. For advice on your own situation, speak to a qualified professional, several of whom you can consult on Finvestalk.