Prepared by Finin2min Editorial Desk · Rates and rules verified 5 October 2026
See how a lump sum and regular deposits grow with the compounding frequency you choose — then check the post-tax and inflation-adjusted value, the effective annual yield and the time to double.
Compound interest adds the interest earned back to the balance so that the next period earns interest on a bigger base. The more often interest is added, the higher the effective annual yield (EAY) for the same stated rate.
Formula: A = P × (1 + r ÷ n)n×t, where n is the compounding frequency. For continuous compounding, A = P × er×t. EAY = (1 + r ÷ n)n − 1.
₹1,00,000 at 8% for 10 years, compounded quarterly: maturity = ₹2,20,804; interest = ₹1,20,804; effective annual yield = 8.243%. With annual compounding the same deposit reaches ₹2,15,892.
| Product | Typical compounding | Check |
|---|---|---|
| Bank fixed deposit (cumulative) | Quarterly | Bank terms |
| Post office time deposit | Quarterly interest, paid annually | India Post |
| PPF | Annual (on the lowest balance between the 5th and month-end) | PPF scheme rules |
| NSC | Annual | NSC rules |
| Mahila Samman Savings Certificate | Quarterly | Scheme rules |
| Mutual funds / equity | Daily NAV movement (use CAGR) | Use the SIP or lumpsum calculator |
Always compare products by effective annual yield, not by the stated rate.
Bank and post-office interest is taxed every year as it accrues (you report the interest each year even if it is reinvested in a cumulative deposit). The calculator therefore taxes the interest yearly at your slab rate plus 4% cess, which lowers the effective rate and the compounding. Equity and debt mutual-fund gains are taxed on redemption — use the lumpsum calculator for those.
Simple interest is earned only on the principal; compound interest is earned on the principal plus previously earned interest, so growth accelerates with time.
It helps, but modestly. At 8% for 10 years, annual compounding gives about 2.159 times the money and monthly compounding about 2.220 times.
It is the single yearly rate that would give the same result as the stated rate compounded n times a year. Use it to compare products.
Each deposit earns the effective monthly equivalent of the yield you chose. Use the start-of-month option for deposits made at the beginning of the month.
Mutual funds do not compound a fixed rate. Use the expected CAGR in the lumpsum or SIP calculators, which also model capital-gains tax.
Rates and rules shown here were checked against the sources above on 5 October 2026. Government notifications can change a rate or rule at short notice; always confirm on the official site before you invest, file or claim.
Educational estimate only. Tax, legal, financial or regulatory treatment depends on facts and the law applicable to the relevant period. Verify the current official source or obtain professional advice before acting.
Scope: Growth of a lump sum with optional monthly deposits at a fixed rate, with post-tax and inflation-adjusted values.
The calculation engine was checked against an independently written reference implementation across 480 compounding input combinations, and against published figures where the scheme publishes them. Review date: 5 October 2026.
Prepared by Finin2min Editorial Desk. Educational estimate only.
Background, worked examples and the rules behind these numbers.