How this calculation works
The frequency m tells us how often interest is added to the balance each year. Once added, interest can earn further interest.
Future value = P × (1 + annual rate ÷ 100 ÷ m)^(m × years)A worked example
₹1,00,000 at 8%, compounded quarterly for 5 years, grows to approximately ₹1,48,594.74.
Good to know
A planning estimate. Actual products may use different payment dates, fees, tax treatment or rounding. Rates entered here are assumptions, not offers.
Reference: Investor.gov: compound interest calculator (opens in a new tab) ↗
The second year starts from a different number
Consider ₹10,000 growing by 10% once a year. The first year adds ₹1,000, leaving ₹11,000. The next year adds ₹1,100 because the same percentage now applies to a larger balance. After two years the total is ₹12,100, not ₹12,000.
The extra ₹100 is interest on the first year’s interest. This small example explains the curve in the illustration: a fixed percentage can produce an increasing rupee gain even when the rate itself never rises.
A doubling-time shortcut, with a warning
The “rule of 72” estimates a doubling time by dividing 72 by an annual percentage rate. At 8%, it suggests roughly nine years. It is a mental shortcut, not the calculation used by this tool, and its accuracy depends on the rate and compounding convention.
For annual compounding, the exact doubling time solves (1 + rate/100)^years = 2. Use the full model for a numerical plan. A doubling illustration based on an assumed investment return is not a promise that money will actually double on schedule.
Frequency and rate must be read together
A nominal annual rate compounded monthly is not the same quotation as an effective annual return of the same percentage. This tool divides a nominal annual rate by the selected compounding frequency. Increasing that frequency can increase the modeled effective annual growth.
Do not mix a product’s effective annual yield with monthly compounding unless you first convert the rate correctly. Tax, charges and changing returns are also outside the simplified model. Compare quotations using consistent definitions.
A few questions, answered
Does this include monthly deposits?
No. It models one starting amount. Use the SIP calculator to explore regular monthly contributions under its stated assumptions.
Can I choose monthly compounding?
Yes. Select Monthly in the compounding field. The entered annual rate is then treated as a nominal rate divided into twelve periods.