Compound Interest Calculator
See how an initial amount plus monthly contributions grow with compounding — with a year-by-year line chart.
What this calculator does
Compound interest is the most under-appreciated concept in money, and the most over-quoted. Everyone knows the Einstein quote (which he probably never actually said). Very few people internalise what it feels like in practice, which is: nothing seems to be happening for a long time, and then suddenly a lot is happening all at once.
Here's the honest arc: for the first 7-8 years of any long-term investment plan, the balance grows mostly because of your contributions, not the returns. It can feel discouraging. Then somewhere around year 10, the returns start matching your contributions in size. By year 15-20, the returns dwarf what you're putting in. This calculator lets you see that shape year by year on a chart.
Two inputs matter more than people realise: the number of years, and how consistent you are. A ₹3,000/month SIP started at age 22 usually beats a ₹8,000/month SIP started at age 32, even though the second person is putting in more than twice as much money each month. Time is the single most valuable input you have.
A = P(1+i)^n + PMT × [((1+i)^n − 1)/i], i = r/12Variables explained
- Principal (P)
Initial amount.
- Monthly contribution (PMT)
Optional recurring add-on.
- Annual rate (r)
Compounded monthly in most Indian products.
- Time (n)
In months for monthly compounding.
Worked example: ₹1 lakh + ₹5,000/month for 20 years at 10%
P = ₹1,00,000 · PMT = ₹5,000 · r = 10%/12 = 0.833% · n = 240 months.
Growth of principal: 1,00,000 × (1.00833)^240 ≈ ₹7.35 lakh.
Growth of monthly contributions: 5,000 × [((1.00833)^240 − 1) / 0.00833] ≈ ₹37.9 lakh.
Combined future value: ~₹45.2 lakh from ₹13 lakh total invested (₹1L + ₹12L monthly).
How to read your projection like an adult
Every investment calculator has one built-in lie: the return rate is an assumption, not a promise. If you use 12% for Indian equity mutual funds, that's a rough long-term average — not what your specific SIP will do next year. Markets are lumpy. The projection is a compass, not a GPS.
Run three scenarios: pessimistic (say 8%), realistic (10-11%), and optimistic (13%). If the pessimistic case still gets you close to your goal, you have a robust plan. If only the optimistic case works, you're one bad market cycle away from disappointment — increase your contribution, extend your timeline, or lower the goal.
Also, watch inflation. ₹1 crore in 2046 will buy roughly what ₹30 lakh buys today (at ~6% inflation). The number that looks huge on a projection is smaller in real purchasing power.
Don't stop contributing when the market falls. That's mathematically the worst time to stop. The whole point of a SIP is that you buy more units when prices are low.
Common mistakes
- ✗Stopping investments during market downturns.
- ✗Interrupting compounding to withdraw for non-emergencies.
- ✗Underestimating small monthly amounts — ₹500 for 40 years is real money.
- ✗Chasing higher returns instead of longer time.
Frequently asked questions
How is compound different from simple interest?+
Simple = interest only on principal. Compound = interest on principal + accumulated interest. Almost all Indian long-term products use compounding.
What compounds tax-free in India?+
EPF, PPF, and Sukanya Samriddhi Yojana under EEE. Equity mutual funds compound tax-deferred (LTCG at 10% only when you redeem).
Does compounding work on credit card debt?+
Yes — the wrong way. Credit card debt compounds monthly at 3-4% per month, roughly 42% annualised.
Reminder: this calculator is a learning tool, not personalised advice. For decisions involving your actual money, talk to a SEBI-registered adviser about your specific situation.