Final Amount₹1,48,595
Interest Earned₹48,595
What Is Compound Interest?
Compound interest is "interest on interest." Unlike simple interest (calculated only on principal), compound interest adds earned interest back to the principal, so each period's interest is calculated on a growing base.
Einstein reportedly called it the "eighth wonder of the world."
Compounding Frequency Matters
- Annually: Interest added once per year
- Quarterly: 4 times per year (Indian FD standard)
- Monthly: 12 times per year (some savings schemes)
- Daily: 365 times per year (highest growth)
More frequent compounding = slightly higher returns.
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