Compound Interest Calculator – CAGR, EAR, Rule of 72 & Inflation-Adjusted Returns
Calculate the exact maturity value of any lump-sum or monthly SIP investment with compound interest. Choose from five compounding frequencies (Daily, Monthly, Quarterly, Semi-Annual, Annual), see your CAGR, Effective Annual Rate, Rule of 72 doubling time, and inflation-adjusted real value — all instantly. Includes a two-line growth chart, donut split, and a collapsible year-by-year breakdown table. Free, no login.
Calculator Inputs
Maturity Value after 10 years
₹14,91,734
Inflation-adjusted (today's value): ₹8,32,976
Principal vs Interest Split
📈 Invested vs Portfolio Balance
📊 Year-by-Year Balance
Sponsored
CAGR + EAR + Rule of 72
See the three most important investment metrics automatically calculated for every scenario.
SIP + Lump Sum Support
Combine a one-time principal with regular monthly SIP contributions in a single calculation.
Charts + Year-by-Year Table
Growth line chart, donut split, bar chart, and a full yearly breakdown — all in one tool.
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📚 What Is a Compound Interest Calculator?
A Compound Interest Calculator computes the future value of an investment where interest is earned not just on the original principal but also on previously accumulated interest — causing exponential rather than linear growth. This tool goes beyond the basic formula by supporting monthly SIP contributions alongside a lump sum, five compounding frequencies, tax deduction on interest, inflation adjustment for real purchasing-power returns, CAGR, Effective Annual Rate, Rule of 72 doubling time, and a full year-by-year growth table with a two-line chart showing the widening gap between what you invested and what your portfolio became.
🎯 Who Should Use This Tool?
- Individual investors: Project growth of PPF, FD, NPS, mutual fund SIPs, or savings accounts at any compounding frequency.
- Students and exam candidates: Learn how the compound interest formula works with live, real-number examples.
- Financial planners and advisors: Illustrate wealth accumulation scenarios for clients comparing different instruments.
- Business owners: Calculate interest on business loans or deposits with custom compounding schedules.
- Retirement planners: See how a fixed SIP amount grows over 20–30 years at different expected returns.
⚙️ Functional Features
- Range Sliders + Inputs: Adjust principal, rate, duration, SIP, inflation, and tax with smooth sliders — or type exact values directly.
- Five Compounding Frequencies: Daily (365×), Monthly (12×), Quarterly (4×), Semi-Annual (2×), Annual (1×) — all selectable from a dropdown.
- CAGR: Compound Annual Growth Rate shown automatically — the most meaningful single number to compare investments.
- Effective Annual Rate (EAR): True annual yield accounting for compounding frequency — always compare EAR, not nominal rates.
- Rule of 72: Instant doubling-time estimate — divide 72 by rate to see how many years until your money doubles.
- Inflation Adjustment: Shows your maturity value in today's purchasing power alongside the nominal figure.
- Tax on Interest: Deduct TDS or income tax slab rate on gross interest to see post-tax returns.
- Two-Line Growth Chart: "Total Invested" vs "Portfolio Balance" lines — visually shows the compounding gap widening over time.
- Donut Chart: Principal + contributions vs interest earned — instant visual split.
- Year-by-Year Table: Expand to see every year's cumulative invested amount, balance, interest earned, and wealth multiplier.
- Copy Summary: One-click copy of all key metrics formatted for sharing or pasting into documents.
- Reset to Defaults: Instantly restore the default scenario (₹1L principal + ₹5K monthly SIP at 12% for 10 years).
How Compound Interest Works — The Formula Explained
The standard compound interest formula is: A = P × (1 + r/n)nt, where:
- P = Principal (initial investment amount)
- r = Annual interest rate as a decimal (e.g., 12% = 0.12)
- n = Compounding frequency per year (Daily = 365, Monthly = 12, Quarterly = 4, Semi-Annual = 2, Annual = 1)
- t = Time in years
- A = Final amount (principal + interest)
Example: ₹1,00,000 at 12% p.a. compounded monthly for 5 years: A = 1,00,000 × (1 + 0.12/12)60 ≈ ₹1,81,940. The same amount with simple interest gives ₹1,60,000 — the ₹21,940 difference is pure compounding gain.
This tool extends the formula to include monthly SIP contributions by adding each month's contribution before applying the compounding factor — accurately modelling systematic investment plans alongside a lump-sum deposit.
CAGR, Effective Annual Rate & Rule of 72 — Three Numbers Every Investor Needs
1. CAGR — Compound Annual Growth Rate
CAGR represents the average annual rate at which your investment grew, smoothed out over the entire period. Formula: CAGR = (Final Value / Initial Value)1/years − 1.
Example: ₹1,00,000 grew to ₹3,30,000 in 10 years (with monthly SIP + 12% rate). CAGR = (3.30)0.1 − 1 ≈ 12.67%. CAGR is far more useful than "total return %" because it normalises results across different time periods, allowing apples-to-apples comparison of investments that ran for 5 years versus 15 years.
2. Effective Annual Rate (EAR)
The nominal interest rate (e.g., 12% p.a.) does not account for how often interest compounds. The EAR gives you the true annual yield: EAR = (1 + r/n)n − 1.
| Compounding | Nominal Rate | EAR |
|---|---|---|
| Annual | 12% | 12.00% |
| Quarterly | 12% | 12.55% |
| Monthly | 12% | 12.68% |
| Daily | 12% | 12.75% |
Always compare EAR — not nominal rates — when evaluating FDs, savings accounts, or mutual funds with different compounding schedules.
3. Rule of 72 — Doubling Time Estimate
The Rule of 72 is a mental math shortcut: Years to double = 72 ÷ Annual Rate.
- At 6% (typical savings): doubles every 12 years
- At 7.1% (PPF 2026 rate): doubles every ~10.1 years
- At 12% (equity fund target): doubles every 6 years
- At 15% (small-cap ambition): doubles every 4.8 years
This approximation is accurate within 1% for rates between 6% and 20%. The tool calculates it exactly for you so you don't need to memorise the formula.
How to Use the Compound Interest Calculator
- Principal: Enter the initial lump-sum investment amount. Set to 0 if you only have a monthly SIP without an upfront deposit.
- Monthly SIP: Enter your regular monthly contribution amount. Set to 0 for a pure lump-sum calculation with no ongoing deposits.
- Annual Interest Rate: Enter the expected rate of return per year — use the FD rate, PPF rate, or historical mutual fund CAGR.
- Compounding Frequency: Choose how often interest is compounded. Most FDs compound quarterly; savings accounts are quarterly; daily compounding gives the highest EAR.
- Investment Duration: Enter the number of years you plan to stay invested.
- Inflation Rate: Enter expected annual inflation (India average: 5–6%) to see the real purchasing power of your maturity amount.
- Tax on Interest: Enter your income tax rate (0–40%) to see post-tax returns after TDS or slab deduction on interest income.
- Read the results: Maturity value, CAGR, EAR, wealth multiplier, and Rule of 72 update instantly. Expand the yearly table to see the year-by-year progression.
Compound Interest in Real Investment Scenarios (India 2026)
Here is how compound interest applies to the most common investment instruments available in India:
- PPF (Public Provident Fund): 7.1% p.a., compounded annually. ₹1,00,000 invested for 15 years grows to approximately ₹2,81,000 — nearly tripling with full tax exemption under Section 80C and EEE status.
- Bank FD (Fixed Deposit): Typical 6.5–7.5% p.a., compounded quarterly. ₹5,00,000 for 5 years grows to approximately ₹7,00,000–₹7,20,000. Interest above ₹40,000/year (₹50,000 for seniors) attracts 10% TDS.
- Mutual Fund SIP (Equity): Historical average large-cap returns: 12–15% p.a. A ₹5,000 monthly SIP for 20 years at 12% grows to approximately ₹49.96 lakh against ₹12 lakh invested — a 4.16x multiplier.
- Savings Account: 3.5–4% p.a., compounded quarterly. Suitable for emergency funds and short-term liquidity, not long-term wealth creation — at 4% your money doubles only every 18 years (Rule of 72).
- NPS (National Pension System): Historical equity allocation returns of 10–12% p.a. Monthly employer + employee contributions compounding over 25–35 years produce significant corpus for retirement.
Common Compound Interest Calculation Mistakes
- Using the nominal rate without adjusting for compounding frequency — a 12% FD compounded quarterly has an EAR of 12.55%, not 12%. Always enter the right frequency.
- Confusing CAGR with average annual return — if a fund returned 50%, −25%, 30% over 3 years, the arithmetic average is 18.3% but the CAGR is only about 13.6%. CAGR is always lower or equal.
- Not accounting for inflation — ₹50 lakh in 20 years at 6% inflation is worth only ₹15.6 lakh in today's money. The inflation-adjusted field in this calculator shows this critical adjustment.
- Forgetting TDS on FD interest above ₹40,000/year — your actual post-tax take-home return is lower than the stated rate, especially for higher tax bracket individuals.
- Assuming compounding is daily when a bank states daily interest but credits monthly — the effective compounding frequency is monthly, not daily, which gives a lower EAR.
- Not increasing SIP contributions over time — a fixed ₹5,000 SIP over 20 years does not account for salary increases. Stepping up SIP by 10% annually dramatically boosts the final corpus.
❓ FAQs
What does this compound interest calculator compute?
It computes the future maturity value of your investment using the compound interest formula, supporting both a lump-sum principal and regular monthly SIP contributions. It also shows CAGR (Compound Annual Growth Rate), Effective Annual Rate (EAR), wealth multiplier, Rule of 72 doubling time, inflation-adjusted real value, and a full year-by-year breakdown table.
What information do I need to enter?
Enter your initial principal amount, optional monthly SIP contribution (set to 0 for lump sum only), annual interest rate, compounding frequency (daily/monthly/quarterly/semi-annual/annual), investment duration in years, expected inflation rate for real-value calculation, and tax rate on interest if applicable.
Does it support monthly SIP contributions?
Yes. Enter your monthly SIP amount in the 'Monthly SIP / Contribution' field. The principal can be 0 for a pure SIP-only calculation. The tool compounds both the lump sum and each monthly contribution together, giving you an accurate maturity value for systematic investment plans.
How is compound interest different from simple interest?
With simple interest, you earn a fixed amount on the original principal every year. With compound interest, you earn interest on both the principal AND on previously accumulated interest — so your balance grows exponentially. For example, ₹1,00,000 at 12% simple interest for 10 years gives ₹2,20,000. The same amount at 12% compounded monthly gives approximately ₹3,30,000 — ₹1,10,000 more, purely from the power of compounding.
What is CAGR and how is it calculated?
CAGR (Compound Annual Growth Rate) is the rate at which your investment would have grown each year if it grew at a perfectly steady pace. Formula: CAGR = (Final Value / Initial Investment)^(1 / Years) − 1. For example, if ₹1,00,000 grew to ₹3,00,000 in 10 years, CAGR = (3)^(0.1) − 1 ≈ 11.61%. CAGR is the most accurate single number to compare investment performance across different time periods.
What is the Rule of 72 and why is it useful?
The Rule of 72 is a quick mental math shortcut: divide 72 by your annual interest rate to find approximately how many years it takes to double your money. At 12% per year, your money doubles every 72 ÷ 12 = 6 years. At 7.1% (PPF rate), it doubles every 72 ÷ 7.1 ≈ 10 years. The calculator shows this instantly alongside your results so you can quickly assess the doubling power of any interest rate.
What is Effective Annual Rate (EAR) and how is it different from the stated rate?
The stated nominal rate (e.g., 12%) is the rate before accounting for compounding frequency. The Effective Annual Rate (EAR) is the true annual yield you actually receive. Formula: EAR = (1 + r/n)^n − 1. At 12% nominal: monthly compounding gives EAR = 12.68%; quarterly gives 12.55%; daily gives 12.75%. The more frequent the compounding, the higher the EAR. Always compare EAR — not nominal rates — when choosing between investment options.
Should I account for inflation in compound interest calculations?
Yes. A 12% nominal return with 6% inflation gives a real return of only about 5.7% in purchasing power terms. The calculator shows the 'inflation-adjusted value' — what your maturity amount is worth in today's rupees. For long-term goals (10–30 years), ignoring inflation can make returns look much better than they truly are in real-world buying power.
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