Compound Interest Calculator
See what a lump sum grows into when interest earns interest — with the final amount, total profit and a year-by-year growth table, updated as you type.
Final amount
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Show year-by-year growth table
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What is compound interest?
Compound interest is interest calculated on your original deposit plus all the interest it has already earned. With simple interest, PKR 100,000 at 10% earns a flat PKR 10,000 every year. With compound interest, year two's 10% is charged on 110,000, year three's on 121,000, and so on — the growth accelerates. Albert Einstein is (probably apocryphally) said to have called it the eighth wonder of the world, but the maths behind the legend is real: over long periods, compounding dominates everything else.
How to use this calculator
Enter the amount you are investing (or borrowing), the annual rate, the number of years, and how often the interest compounds — yearly, half-yearly, quarterly, monthly or daily. Bank savings accounts in Pakistan typically compound monthly or half-yearly; National Savings certificates and term deposits vary by product. More frequent compounding at the same nominal rate produces a slightly larger final amount. Open the growth table to watch the balance snowball year by year.
The formula
where P is the principal, r the annual rate as a decimal, m the number of compounding periods per year, and t the number of years. The interest earned is A − P.
Worked example
Invest PKR 100,000 at 10% per year, compounded yearly, for 10 years: A = 100,000 × (1.10)10 = PKR 259,374 — your money grew by about 159%, and more than PKR 59,000 of that profit is "interest on interest". The same deposit at 12% compounded monthly for 5 years gives 100,000 × (1 + 0.01)60 = PKR 181,670.
When is this useful?
Planning long-term savings for a child's education or a house deposit, comparing bank deposit offers with different compounding frequencies, understanding what a profit rate on a savings certificate really delivers, or seeing why starting to save at 25 beats starting at 35 even with smaller amounts. The same mechanics work against you on unpaid credit card balances, where interest compounds on interest owed. For the full story with decade-by-decade tables, read the power of compound interest.
Frequently asked questions
What is the difference between simple and compound interest?
Simple interest is charged only on the original principal every period. Compound interest is charged on principal plus accumulated interest, so the balance grows faster — dramatically so over long periods.
Does more frequent compounding always earn more?
At the same nominal annual rate, yes, but the difference is modest: PKR 100,000 at 10% for a year gives 110,000 compounded yearly versus about 110,471 compounded monthly. Frequency matters far less than the rate and the time.
What is the Rule of 72?
A quick mental shortcut: divide 72 by the annual interest rate to estimate the years needed to double your money. At 12%, money doubles roughly every 72 ÷ 12 = 6 years.
Can I use this for monthly deposits (like a committee or SIP)?
This tool models a single lump sum. Regular monthly contributions need a different formula (future value of an annuity). You can approximate by running the tool separately on amounts deposited at different times.
Does the calculation account for inflation or tax?
No — it shows nominal growth. Withholding tax on bank profit and inflation both reduce real returns, so subtract those when comparing against rising prices.