Watch your savings grow with the power of compounding.
Compound interest formula
A = P × (1 + r/n)n × t, where P is the starting amount, r the annual rate, n the number of times interest is compounded per year and t the number of years.
With compounding you earn interest on your interest, so growth speeds up over time. That's why starting early matters more than investing large amounts later.
Rule of 72
A quick way to estimate how long money takes to double: divide 72 by the annual interest rate. At 8%, money doubles in about 72 ÷ 8 = 9 years.
Simple vs compound interest
Simple interest is calculated only on the original amount. Compound interest is calculated on the growing balance. The “with simple interest” figure above shows the difference for the same inputs.
Frequently asked questions
How much difference does compounding frequency make?
₹1 lakh at 10% for 10 years grows to ₹2,59,374 with yearly compounding but ₹2,70,704 with monthly compounding. The more often interest is added, the faster the money grows, though the extra gain gets smaller as frequency increases.
What is the effective annual rate?
It is the true yearly return after compounding: (1 + r/n)ⁿ − 1, where r is the nominal rate and n the number of compounding periods. For example, 12% compounded monthly is an effective 12.68% a year. Use it to compare products with different compounding.
Where is compound interest used in real life?
FDs, RDs, PPF, EPF and mutual fund growth all work through compounding. It also works against you: credit card dues and unpaid loans compound, which is why debt grows quickly if only the minimum is paid.
How long does it take to double my money?
Use the Rule of 72: divide 72 by the yearly interest rate. At 8%, money doubles in about 9 years; at 12%, in about 6 years. Read more in the power of compounding.