Calculate returns for SIP & lumpsum investments
Higher frequency = Higher returns. Effective rate: 10.00%
| Year | Invested | Returns | Total Value |
|---|---|---|---|
| 1 | ₹1.00 L | ₹10,000 | ₹1.10 L |
| 2 | ₹1.00 L | ₹21,000 | ₹1.21 L |
| 3 | ₹1.00 L | ₹33,100 | ₹1.33 L |
| 4 | ₹1.00 L | ₹46,410 | ₹1.46 L |
| 5 | ₹1.00 L | ₹61,051 | ₹1.61 L |
| 6 | ₹1.00 L | ₹77,156 | ₹1.77 L |
| 7 | ₹1.00 L | ₹94,872 | ₹1.95 L |
| 8 | ₹1.00 L | ₹1.14 L | ₹2.14 L |
| 9 | ₹1.00 L | ₹1.36 L | ₹2.36 L |
| 10 | ₹1.00 L | ₹1.59 L | ₹2.59 L |
The Power of Compounding is one of the most powerful concepts in investing. When you earn returns on your investment and then earn returns on those returns, your wealth grows exponentially over time.
Our calculator helps you understand how your money grows with different compounding frequencies (daily, monthly, quarterly, yearly) and shows the impact of inflation on your real returns. Use it to plan your financial goals effectively.
A = Final amount
P = Principal amount
r = Annual interest rate
n = Compounding frequency
t = Time in years
Example: ₹1 lakh at 12% for 10 years with yearly compounding = ₹3.11 lakh
FV = Future value
PMT = Monthly payment
r = Monthly interest rate
n = Total months
Example: ₹5,000/month for 10 years at 12% = ₹11.6 lakh (invested ₹6L)
Returns on ₹1,00,000 invested at 12% for 10 years with different compounding frequencies:
| Compounding Frequency | Times per Year | Final Amount | Total Interest |
|---|---|---|---|
| Daily | 365 | ₹3,32,011 | ₹2,32,011 |
| Monthly | 12 | ₹3,30,039 | ₹2,30,039 |
| Quarterly | 4 | ₹3,26,204 | ₹2,26,204 |
| Half-Yearly | 2 | ₹3,20,714 | ₹2,20,714 |
| Yearly | 1 | ₹3,10,585 | ₹2,10,585 |
Key Insight: Daily compounding gives ₹21,426 more than yearly compounding on the same investment!
Returns: 7.1% (tax-free) | Tenure: 15 years
Safe government scheme with EEE tax benefits. Yearly compounding. Lock-in period 15 years.
Returns: 10-15% (long-term) | Risk: High
Best for wealth creation. Daily NAV compounding. Invest via SIP for rupee cost averaging.
Returns: 10-12% | Tax benefit: ₹2L
Retirement-focused. Daily compounding. Tax deduction under 80CCD(1B).
Returns: 6-8% | Risk: Very Low
Safe option. Quarterly compounding typically. Best for short-term goals.
Returns: 8.2% (tax-free) | For girl child
Government scheme. Yearly compounding. Maturity at 21 years.
Returns: 7-9% | Risk: Low-Medium
Better than FD for 3+ years. Daily NAV. Indexation benefit for tax.
| Feature | Simple Interest | Compound Interest |
|---|---|---|
| Calculation | On principal only | On principal + interest |
| Growth | Linear | Exponential |
| ₹1L at 10% for 10 years | ₹2,00,000 | ₹2,59,374 |
| ₹1L at 10% for 20 years | ₹3,00,000 | ₹6,72,750 |
| Best For | Short-term loans | Long-term investments |
Compound interest is interest calculated on both the principal amount and the accumulated interest from previous periods. Unlike simple interest (calculated only on principal), compound interest grows exponentially. For example, ₹1 lakh at 10% for 10 years becomes ₹2.59 lakh with compound interest vs ₹2 lakh with simple interest. This exponential growth is called the "power of compounding".
For lumpsum: A = P(1 + r/n)^(nt), where A = final amount, P = principal, r = annual rate, n = compounding frequency, t = time in years. For SIP: FV = PMT × [((1 + r)^n - 1) / r] × (1 + r), where PMT = monthly payment, r = monthly rate, n = total months. Daily compounding gives highest returns, followed by monthly, quarterly, and yearly.
Higher compounding frequency means higher returns. On ₹1 lakh at 12% for 10 years: Daily compounding = ₹3.32L, Monthly = ₹3.30L, Quarterly = ₹3.26L, Yearly = ₹3.11L. The difference increases with higher amounts, rates, and time periods. Most mutual funds use daily compounding, while FDs typically use quarterly compounding.
SIP (Systematic Investment Plan) is better for regular income earners, reduces market timing risk through rupee cost averaging, and builds investment discipline. Lumpsum is better when you have a large amount available, during market corrections, or for short-term goals. For long-term goals (10+ years), SIP often performs better due to consistent investing and lower average cost.
Real returns = [(1 + nominal return) / (1 + inflation rate)] - 1. For example, 12% return with 6% inflation gives real return of 5.66%. Our calculator shows inflation-adjusted value: Future Value / (1 + inflation)^years. This tells you the actual purchasing power of your investment. Always consider inflation when planning long-term investments.
Top options: Equity Mutual Funds (10-15% returns), Public Provident Fund (7.1%, tax-free), National Savings Certificate (7.7%), Fixed Deposits (6-8%), Sukanya Samriddhi Yojana (8.2% for girl child), NPS (10-12% long-term). Equity markets offer highest compounding potential but with higher risk. Mix different options based on your risk appetite and goals.