Calculate how any lump sum grows with compound interest. Choose compounding frequency and see the magic of interest earning interest over time.
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The initial amount you are investing or depositing.
Annual rate offered by the bank or investment product.
Number of years the money stays invested.
Bank FDs are usually quarterly. Savings accounts are monthly or daily.
P = Principal r = Annual rate ÷ 100 n = Compounding periods per year t = Years
More frequent compounding = slightly higher returns. Daily compounding on 8% gives an effective annual rate of 8.328% vs exactly 8% for annual compounding.
Compound interest means you earn interest on your interest, not just on the principal. Over long periods this creates exponential growth — the core of the Rule of 72.
Divide 72 by the interest rate to find how many years it takes to double your money. At 8%, 72 ÷ 8 = 9 years to double.
More frequent = slightly better. But the difference between monthly and daily is tiny. The rate and time period matter far more.
Compound interest is for a one-time lump sum. SIP is for regular monthly investments. Both use compounding, but SIP builds corpus through instalments.