How to Calculate Compound Interest: Formula & Example

Compound interest is how savings and investments grow over time.

Formula

A = P(1 + r/n)^(nt), where P = principal, r = annual rate, n = compounds per year, t = years.

Example

₹1,00,000 at 8% compounded yearly for 10 years ≈ ₹2,15,892.

Power of compounding

The earlier you start, the more your money grows — time is the biggest factor.

Tip

Use a calculator to compare monthly vs yearly compounding.