The formula
A = P × (1 + r/n)n × t
A is the final amount, P the amount you invest, r the annual interest rate (as a decimal), n the number of times interest is compounded per year, and t the number of years.
Example: ₹1,00,000 at 7% for 10 years
| Compounding | Value after 10 years | Interest earned |
|---|---|---|
| Yearly | ₹1,96,715 | ₹96,715 |
| Half-yearly | ₹1,98,979 | ₹98,979 |
| Quarterly | ₹2,00,160 | ₹1,00,160 |
| Monthly | ₹2,00,966 | ₹1,00,966 |
More frequent compounding gives a slightly higher result, but the rate and the time you stay invested matter far more.
Simple vs compound interest
With simple interest at 7%, ₹1,00,000 earns ₹7,000 every year, ₹70,000 over 10 years. With yearly compounding it earns ₹96,715, because each year's interest is added to the balance.
Try it yourself. Get your own result in seconds with the free Savings Calculator.
Open the Savings CalculatorFrequently asked questions
What is n in the compound interest formula?
The number of times interest is added per year: 1 for yearly, 4 for quarterly, 12 for monthly.
Do Indian banks compound FDs quarterly?
Most banks compound fixed deposit interest quarterly; check your bank's terms.
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