See the magic of compounding — how your money grows exponentially over time
Maturity Amount
₹2,21,964
Principal
₹1,00,000
Interest Earned
₹1,21,964
Compound interest is often called the eighth wonder of the world — and for good reason. Unlike simple interest, which is calculated only on the principal, compound interest is calculated on both the principal and the accumulated interest. This means your money grows faster and faster as time goes on.
The formula for compound interest is: A = P × (1 + r/n)^(n×t), where A is the final amount, P is the principal, r is the annual interest rate, n is the number of times interest is compounded per year, and t is the time in years.
The frequency at which interest is compounded significantly affects your returns. For example, ₹1 lakh invested at 8% for 10 years:
Annually
₹2.16L
Quarterly
₹2.21L
Monthly
₹2.22L
Daily
₹2.23L
The Rule of 72 is a simple way to estimate how long it takes to double your money. Divide 72 by the annual interest rate to get the approximate doubling time. At 8% interest, money doubles in 72/8 = 9 years. At 12%, it doubles in just 6 years. This rule helps investors appreciate why higher returns and longer time horizons make such a dramatic difference.