Compound Interest Calculator India — CI Formula & Rule of 72
Calculate compound interest on your investments using the standard A = P(1 + r/n)^(nt) formula with Indian number formatting. Compare compounding frequencies across bank FDs, PPF, EPF, and mutual funds. Use the Rule of 72 to estimate how fast your money doubles. Updated with FY 2025-26 rates.
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How to Use This Calculator
Compound Interest tab
Enter your principal amount (e.g. ₹1,00,000), the annual interest rate (e.g. 8% for a bank FD, 7.1% for PPF, 12% for equity), the time period in years, and the compounding frequency (quarterly for banks, annually for PPF, monthly for EPF). The calculator shows the maturity amount, total interest earned, and a comparison with simple interest to illustrate the power of compounding.
Rule of 72 tab
Enter any rate of return to instantly see how many years it takes to double your money. The tab also shows a reference table for common Indian investment rates: savings accounts (6%), bank FDs (7%), PPF (7.1%), senior citizen FDs / SCSS (8%), EPF (8.25%), balanced funds (10%), equity (12%), and mid/small-cap (15%). Use this to quickly compare doubling times across instruments.
Compounding Frequency Impact tab
Enter your principal, rate, and time period. The calculator shows a side-by-side comparison of all 5 compounding frequencies — annually, semi-annually, quarterly, monthly, and daily — so you can see exactly how much more frequent compounding earns. This is useful when comparing PPF (annual) vs EPF (monthly) vs bank FD (quarterly).
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The Formula
Compound interest is calculated using the standard formula where interest earns interest on the accumulated amount:
A = P(1 + r/n)(nt)
Where:
A = Maturity amount (principal + interest)
P = Principal (initial investment)
r = Annual interest rate (as decimal, e.g. 8% = 0.08)
n = Number of times interest is compounded per year
t = Time period in years
Compound Interest Earned:
CI = A − P = P[(1 + r/n)(nt) − 1]
Simple Interest (for comparison):
SI = P × r × t
Asimple = P + SI = P(1 + rt)
Rule of 72 (doubling time approximation):
Years to Double = 72 ÷ Annual Rate (%)
Compounding frequency values (n):
Annually = 1, Semi-annually = 2, Quarterly = 4, Monthly = 12, Daily = 365
Indian instrument defaults:
Bank savings/FD: Quarterly (RBI mandate)
PPF: Annually (Government of India)
EPF: Monthly (EPFO)
NPS/Mutual Funds: Daily (NAV-based)
The key insight: compound interest earns interest on previously earned interest. Over long periods, this snowball effect creates exponential growth — at 12% compounded quarterly, ₹1 lakh grows to ₹32.1 lakh in 30 years, while simple interest would yield only ₹4.6 lakh.
Example
Priya — IT professional in Pune, investing ₹1,00,000 in a bank FD
Priya (30) has ₹1,00,000 to invest in a bank Fixed Deposit at 8% p.a. compounded quarterly for 10 years. She wants to understand how much she will receive at maturity, and how much more she earns from compounding vs simple interest.
Step 1: Inputs
Step 2: Calculation
Step 3: Comparison with simple interest
Rule of 72 check
Priya's ₹1,00,000 grows to ₹2,20,804 in 10 years at 8% quarterly compounding. The compounding effect adds ₹40,804 more than simple interest would have. If she chose PPF instead (7.1% annual compounding), the maturity would be ₹1,98,979 — less due to both a lower rate and less frequent compounding.
FAQ
Quarterly compounding: Bank savings accounts (mandated by RBI), most bank Fixed Deposits, Recurring Deposits, Senior Citizens Savings Scheme (SCSS).
Annual compounding: Public Provident Fund (PPF), National Savings Certificate (NSC), Sukanya Samriddhi Yojana (SSY).
Monthly compounding: Employee Provident Fund (EPF/EPFO), some NBFCs and corporate FDs.
Daily compounding: Mutual funds (NAV is calculated daily, so returns effectively compound daily), NPS.
You cannot choose the compounding frequency for government schemes or bank savings accounts — it is fixed by the institution or regulator. For bank FDs, some banks offer monthly interest payout (not compounded) vs cumulative (quarterly compounded) — always choose cumulative if you do not need the monthly income.
The rule is most accurate for rates between 6% and 15% — the range where most Indian investments fall. At very low rates (below 4%) or very high rates (above 20%), the approximation becomes less precise. For Indian investors, useful benchmarks are: PPF at 7.1% doubles in ~10 years, EPF at 8.25% doubles in ~8.7 years, and equity at 12% CAGR doubles in ~6 years.
Related rules: the Rule of 114 estimates time to triple (114/rate), and the Rule of 144 estimates time to quadruple (144/rate, or exactly double the doubling time).
Annual compounding: ₹1,76,234
Semi-annual: ₹1,79,085
Quarterly: ₹1,80,611
Monthly: ₹1,81,670
Daily: ₹1,82,194
The difference between annual and daily compounding is ₹5,960 (3.4% of the annual figure). At lower rates (7%) or shorter periods (2 years), the difference shrinks to less than ₹500 on ₹1 lakh. At higher rates (15%) and longer periods (20 years), the difference can be substantial — over ₹1 lakh on a ₹1 lakh investment.
For practical purposes in India: you cannot change the compounding frequency of PPF (annual) or bank FD (quarterly). The frequency matters more when comparing different instruments — e.g., EPF (monthly at 8.25%) may outperform PPF (annual at 7.1%) partly because of more frequent compounding.
Fixed-income with explicit compounding: Bank FDs (quarterly), PPF (annual, 7.1%), EPF (monthly, 8.25%), NSC (annual, 7.7%), SCSS (quarterly, 8.2%), SSY (annual, 8.2%), RD (quarterly), Post Office MIS (monthly interest, no compounding — unless reinvested manually).
Market-linked with implicit compounding: Mutual funds (daily NAV-based), stocks (capital appreciation is effectively compounding), NPS (daily NAV), ULIPs.
No compounding: Bank savings account interest is compounded quarterly by RBI mandate, but many people withdraw the interest — losing the compounding benefit. Similarly, FD with monthly/quarterly interest payout option does not compound (the interest is paid out, not reinvested).
Key tip: Always choose the cumulative option for FDs, RDs, and SCSS if you do not need regular income. This ensures your interest compounds, maximising the final maturity value.