Compound interest means interest earns interest. The final amount A = P × (1 + r/n)^(n·t), where n is the number of times interest is compounded per year. As n grows, the formula approaches continuous compounding: A = P × e^(r·t).

Why does compounding frequency matter? At 10% annual, ₹100,000 over 10 years grows to ₹259,374 with yearly compounding, ₹270,704 with monthly, and ₹271,828 with continuous. The gap is small for short tenures but widens dramatically over decades.

Recurring contributions (SIPs) are where wealth is actually built. ₹10,000/month at 12% for 25 years becomes about ₹1.9 crore — and only ₹30 lakh of that is what you put in. The rest is pure compounding. A step-up SIP (raising your contribution by 10% each year) typically doubles the end balance vs flat SIPs.

Inflation eats returns silently. A 12% nominal return with 6% inflation is only a 5.66% real return. Always look at the real (inflation-adjusted) amount when planning long-term goals like retirement or a child's education.

Tax matters too. Interest taxed annually (e.g. fixed deposits in most jurisdictions) compounds slower than interest taxed at maturity (e.g. some equity mutual funds with long-term capital gains treatment). Run both scenarios in Compare.

Use the Goal Planner to reverse-engineer: pick a target amount, and the calculator tells you the required principal, rate or time. Combine with the Compare tab to figure out which combination of inputs is realistic for you.