Compound Interest Calculator

The core formula is A = P(1 + r/n)^nt, where P is the principal, r is the annual rate as a decimal, n is the number of compounding periods per year and t is the number of years. The final amount A already includes your original deposit, so the interest earned is A − P. This calculator runs the same maths period by period so it can also handle recurring contributions.

Simple interest pays you only on your original deposit. Compound interest pays you on your deposit plus every gain you have already earned. The calculator measures this by comparing the compound interest you earn against the simple interest your identical cash flows would have earned — the difference is the pure “interest on interest”. At 12% for 10 years, roughly a third of your compound return comes from this effect alone.

More frequent compounding always earns slightly more because interest starts working on interest sooner — daily beats yearly. The difference is small (0.2% a year going from yearly to daily at 12%), so the deposit rate and the tax treatment matter far more than the compounding frequency in real life.

It depends on the product. Bank savings profits in Pakistan are taxed as markup on profit, and capital gains on mutual fund units and listed securities attract capital gains tax. In India, interest on many bank deposits is taxed at your slab rate while capital gains have their own rates and holding periods. The figures shown here are pre-tax, so subtract your tax to get the true take-home amount.