Power of Compounding Calculator

Simple interest is paid only on the original amount, every year, so it grows by the same rupee amount annually. Compound interest is paid on the original amount plus everything it's already earned, so each year's gain is a little larger than the last. Over short periods the gap is small; over long ones it becomes the whole story.

Because the compound side is earning returns on returns — an accelerating effect — while the simple side only ever earns on the original amount. Doubling the number of years roughly doubles simple interest's result, but can multiply compound interest's result several times over, depending on the rate.

This tool models a one-time lump sum. A SIP compounds too, but each monthly contribution starts compounding from a different date, which needs a different formula — see the SIP Calculator for that case.

Time, in almost every realistic case — because compounding is exponential in the number of periods and only linear in the rate. Starting 10 years earlier at a modest rate usually beats starting later and chasing a higher one, which is also the exact point the rule of 72 illustrates: the years needed to double your money fall fast as the rate rises, but rise just as fast if you delay.

Yes — debt compounds by the same mechanism, which is why high-interest debt (a credit card at 30%+) grows just as relentlessly as an investment, and why paying it off is often the highest-return move available before investing elsewhere.