Compound Interest Calculator - Compounding Ledger & Chart
Estimate your investment returns with compound interest and recurring contributions.
Compounding Inputs
Compounding Summary
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Year-by-Year Compounding Ledger
| Year | Opening Balance | Contributions | Interest Earned | Closing Balance |
|---|---|---|---|---|
| Year 1 | ₹1,00,000 | ₹12,000 | ₹11,142 | ₹1,23,142 |
| Year 2 | ₹1,23,142 | ₹12,000 | ₹13,565 | ₹1,48,706 |
| Year 3 | ₹1,48,706 | ₹12,000 | ₹16,242 | ₹1,76,948 |
| Year 4 | ₹1,76,948 | ₹12,000 | ₹19,199 | ₹2,08,147 |
| Year 5 | ₹2,08,147 | ₹12,000 | ₹22,466 | ₹2,42,613 |
Calculation Methodology & Rules
The Compound Interest Calculator demonstrates the compounding effect on your initial principal and periodic monthly contributions over time.
1. Compound Interest Formula (Without Contributions)
If you make no periodic contributions, the maturity value is:
A = P × (1 + r / n)n × t
Where:
- P: Principal investment amount (₹)
- r: Annual interest rate (decimal)
- n: Compounding frequency per year (1 for annual, 4 for quarterly, 12 for monthly)
- t: Total years
2. Compounding Frequency Comparisons
Banks in India typically use quarterly compounding for fixed deposits, while savings accounts or recurring deposits might calculate compound interest monthly. More frequent compounding leads to higher effective annual yields.
Frequently Asked Questions
Compound interest is the interest calculated on the initial principal of an investment, which also includes all the accumulated interest from previous periods. In simple terms, it is 'interest on interest'.
The compounding frequency determines how often interest is calculated and added to your principal. More frequent compounding (e.g., monthly vs. annually) results in a slightly higher maturity value because interest starts earning interest sooner.
Periodic monthly contributions dramatically increase your final wealth over long tenures because each new contribution is added to your compounding pool and starts earning compound interest itself.