Finance
See how a principal amount grows over time with compound interest, at any compounding frequency.
Maturity value
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Compound interest is calculated using A = P(1 + r/n)^(nt), where P is your starting principal, r is the annual interest rate, n is how many times per year interest compounds, and t is the number of years. Unlike simple interest, each period's interest gets added to the principal, so future interest is calculated on a growing base.
Invest ₹1,00,000 at 8% annual interest for 10 years, compounded quarterly, and the maturity value comes to roughly ₹2,19,610 — meaning your money more than doubles even though the rate is a single-digit percentage. Switch to annual compounding at the same rate and term, and the result drops slightly to about ₹2,15,892 — a real difference purely from compounding frequency, not the rate itself.
The same annual rate produces different actual returns depending on how often interest is calculated and added back to the principal — daily compounding always beats annual compounding for an identical nominal rate, because interest starts earning its own interest sooner. Over long horizons, this difference compounds into a noticeably different final number, which is why it's worth confirming your specific investment's compounding frequency rather than assuming.
A = P(1 + r/n)^(nt), where P is the principal, r is the annual interest rate, n is how many times per year interest compounds, and t is time in years. The result, A, is the total maturity value.
More frequent compounding (daily vs. annually) yields slightly higher returns for the same nominal rate, because interest starts earning interest sooner. The difference is usually small but grows with larger principal amounts and longer time periods.
Simple interest is calculated only on the original principal every period. Compound interest is calculated on the principal plus all previously earned interest, so it grows faster over time — the longer the time period, the bigger the gap.