📐 Formula Used
A = P × (1 + r/n)^(n×t) EAR = (1 + r/n)^n – 1 CI = A – P
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on both the principal and the interest accumulated from previous periods, causing exponential growth.
What compounding frequency is best?
More frequent compounding = higher returns. Monthly > Quarterly > Half-Yearly > Annually at the same nominal rate.
What is the Rule of 72?
Divide 72 by the annual interest rate to estimate how many years to double your money. At 12% p.a., money doubles in ~6 years.
Does PPF use compound interest?
Yes. PPF uses annual compounding at 7.1% p.a. (current rate), making ₹1.5L/year investment grow to ~₹40L over 15 years.