Simple vs. Compound Interest Calculator
Contrast the power of compound yield against simple linear interest yields on your investments.
Investment Parameters
₹
₹1,000₹50,000,000
%
1%50%
Years
1 Years40 Years
Interest Comparison
Simple Interest Maturity Value (Principal + Interest)
₹200,000
+100.0% simple gain Compound Interest Maturity Value (Principal + Compound)
₹270,704
+170.7% compound gain Extra Returns from Compounding (Compound vs Simple)
₹70,704
Interest Growth Schedule
Start Period:
| Period | Amount Invested | Simple Interest | Compound Interest | Simple Growth | Compound Growth | Compound Balance |
|---|---|---|---|---|---|---|
| 2026 | ₹100,000 | ₹5,000 | ₹5,105 | +₹4,998 | +₹5,104 | ₹105,105 |
| 2027 | ₹100,000 | ₹15,000 | ₹16,111 | +₹9,996 | +₹11,007 | ₹116,111 |
| 2028 | ₹100,000 | ₹25,000 | ₹28,270 | +₹9,996 | +₹12,159 | ₹128,270 |
| 2029 | ₹100,000 | ₹35,000 | ₹41,701 | +₹9,996 | +₹13,431 | ₹141,701 |
| 2030 | ₹100,000 | ₹45,000 | ₹56,539 | +₹9,996 | +₹14,839 | ₹156,539 |
| 2031 | ₹100,000 | ₹55,000 | ₹72,931 | +₹9,996 | +₹16,391 | ₹172,931 |
| 2032 | ₹100,000 | ₹65,000 | ₹91,039 | +₹9,996 | +₹18,108 | ₹191,039 |
| 2033 | ₹100,000 | ₹75,000 | ₹111,043 | +₹9,996 | +₹20,003 | ₹211,043 |
| 2034 | ₹100,000 | ₹85,000 | ₹133,142 | +₹9,996 | +₹22,098 | ₹233,142 |
| 2035 | ₹100,000 | ₹95,000 | ₹157,555 | +₹9,996 | +₹24,413 | ₹257,555 |
| 2036 | ₹100,000 | ₹100,000 | ₹170,704 | +₹4,998 | +₹13,148 | ₹270,704 |
Understanding Simple vs. Compound Interest
Interest calculations differ fundamentally in whether they pay returns only on the original principal (Simple Interest) or also generate returns on previous interest earnings (Compound Interest).
Mathematical Formula
Simple:
A = P(1 + rt)
Compound:
A = P\left(1 + \frac{r}{n}\right)^{nt}
Formula Explanation:
- A: Final Maturity Value
- P: Principal Amount (Initial Investment)
- r: Annual Interest Rate (decimal)
- t: Time Period in Years
- n: Number of times interest compounded per year (monthly compounding here)
Terms & Abbreviations
Simple Interest paid strictly on the starting principal amount.
Compound Interest earned on both principal + accrued interest (interest-on-interest).
p.a. Per Annum (meaning yearly interest rate calculation).
Frequently Asked Questions
Simple Interest is calculated only on the initial principal amount. Compound Interest is calculated on the principal plus all accumulated interest of previous periods, creating an exponential growth curve.
Compound interest is calculated using monthly compounding intervals to represent smooth real-world wealth growth in savings accounts or mutual funds.
Compound interest always yields more returns than simple interest over the same interest rate and tenure, as interest-on-interest grows exponentially over time.