Updated 30 September 2026
What compounding means
With simple interest, you earn interest only on the money you started with. With compound interest, the interest is added to the balance, and from then on it earns interest too. The difference is small at first and huge later.
Take ₹1,00,000 at 10% a year for 10 years. Simple interest pays ₹10,000 every year, so you end with ₹2,00,000. Compounded yearly, you end with ₹2,59,374. The extra ₹59,374 is interest earned on interest. Over 30 years the gap grows to ₹13.45 lakh.
You'll often see compound interest called the eighth wonder of the world, usually credited to Einstein. Nobody has found a reliable source showing he said it, but the maths behind it is real.
How to use the calculator
- Pick your currency at the top of the calculator. Ten currencies are available, including rupees and US dollars.
- Choose Interest rate for a yearly rate, like a fixed deposit, a bond or an expected investment return. Enter the starting amount, the rate, the years and how often interest is added. Add a monthly amount if you'll keep putting money in.
- Choose Trading account to compound a percentage per trade, trading day, week or month, the way traders talk about growing an account.
- The result shows the final balance, the interest earned, the effective yearly rate and the same money compounded at other frequencies. Tap or hover over the chart for any year.
The compound interest formula
A = P × (1 + r ÷ n)^(n × t)
P is the starting amount, r the yearly rate, n how many times a year interest is added and t the number of years. ₹1,00,000 at 10% compounded monthly for 10 years is 1,00,000 × (1 + 0.10 ÷ 12)^120 = ₹2,70,704, which is ₹11,330 more than yearly compounding.
Compound more and more often and the result creeps towards a ceiling called continuous compounding, P × e^(r × t). For this example that's ₹2,71,828, only ₹37 more than daily compounding.
How much does the compounding frequency matter?
| Compounded | ₹1,00,000 after 10 years | Effective yearly rate |
|---|---|---|
| Yearly | ₹2,15,892 | 8.00% |
| Half-yearly | ₹2,19,112 | 8.16% |
| Quarterly | ₹2,20,804 | 8.24% |
| Monthly | ₹2,21,964 | 8.30% |
| Daily | ₹2,22,535 | 8.33% |
Going from yearly to quarterly adds ₹4,911 here. Going from monthly to daily adds just ₹571. The frequency matters, but far less than the rate and the time. Many bank fixed deposits in India, including SBI's Special Term Deposits (its reinvestment option), add interest quarterly, so an 8% cumulative FD really earns about 8.24% a year.
That last column is the effective yearly rate: what the money actually grows by in a year once compounding is counted. Use it to compare offers. A 7.9% rate compounded monthly (8.19% effective) pays more than 8% compounded yearly.
Adding money every month
Most people don't invest once and stop. Put ₹1,00,000 in at 10% compounded monthly, add ₹5,000 at the end of every month for 20 years, and you end with about ₹45.3 lakh from ₹13 lakh of your own money. The calculator treats each monthly addition as earning the same effective rate from the month it goes in. For mutual fund SIPs specifically, the SIP calculator adds step-ups and goal planning, and the lumpsum calculator covers a single investment.
How long until your money doubles?
Divide 72 by the yearly rate: at 8% money doubles in about 9 years, at 12% in about 6. The calculator shows the exact doubling time from the effective rate. The rule also shows why small differences in rate matter so much over long periods: at 6% money doubles about every 12 years, so in 36 years it grows about 8 times. At 12% it doubles about every 6 years (6.1 exactly) and grows about 59 times in the same 36 years.
Compounding a trading account
Traders talk about compounding too: grow the account by a fixed percentage every day or every trade, and let the gains build on each other. Switch the calculator to Trading account to see what that looks like.
| After | Growth | $10,000 becomes |
|---|---|---|
| 20 trading days | 1.22× | $12,202 |
| 60 trading days | 1.82× | $18,167 |
| 120 trading days | 3.30× | $33,004 |
| 250 trading days | 12.03× | $120,322 |
1% a day turns $10,000 into about $120,000 in 250 trading days, roughly a year. The maths is correct, but the assumption is not realistic: it needs a winning day every single day, at the same size, with no losing days at all. Real trading has losses, and losses hurt more than gains help:
| Loss | Gain needed to get back |
|---|---|
| 5% | 5.3% |
| 10% | 11.1% |
| 20% | 25.0% |
| 30% | 42.9% |
| 50% | 100.0% |
A 20% drawdown wipes out about 22 days of 1% gains, and a 50% loss needs a 100% gain just to get back to where you were. That's why the result board shows how many periods of gains a 20% drawdown would undo.
A more practical way traders compound is through position size. If you risk a fixed percentage of the current balance on each trade, say 1%, your lot size grows as the account grows and shrinks after losses. The lot size calculator turns that percentage into a lot size, and on a funded account the prop firm calculator also checks the margin and daily loss rules.
Mistakes to avoid
- Comparing rates with different compounding. Compare effective yearly rates, not headline rates.
- Ignoring tax and inflation. The calculator shows growth before both. At 6% inflation, money growing at 6% a year isn't really growing.
- Stretching a short winning streak. A month of 1% days doesn't mean a year of them. Plan with numbers you could repeat through a bad month.
- Withdrawing the interest. Interest you take out stops compounding. Many FDs offer a payout option, and choosing it turns compound interest into simple interest.