What is compound interest?

Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. It is often called 'interest on interest'. Under compounding, your money grows faster than under simple interest because each period's earnings start earning their own returns the next period.

How does compounding frequency affect returns?

More frequent compounding produces higher final amounts. Example: 1 lakh PKR (100,000) at 12 percent for 10 years gives ≈ 310,585 PKR yearly compounded, ≈ 320,714 PKR quarterly, ≈ 330,039 PKR monthly, and ≈ 332,012 PKR daily. The differences are small per period but meaningful over decades.

What is the formula for compound interest?

The standard formula is A = P × (1 + r/n)^(n × t), where A is the final amount, P is the initial principal, r is the annual interest rate as a decimal, n is the number of compounding periods per year, and t is the number of years.

How do compound returns work in Pakistani saving schemes (Roshan Digital, NSC, Behbood)?

Roshan Digital Account (USD) typically offers 5 to 7 percent annually, paid into a USD savings account, compounding monthly or quarterly depending on the bank. National Savings Certificates (Defence Savings Certificate, Special Savings Certificate) compound profit at 11 to 13 percent PKR with semi-annual or yearly profit payments. Behbood Savings (retirees and widows) offers around 12 to 14 percent PKR with monthly profit. Use this calculator with the appropriate rate and frequency to model expected returns.

How long will 1 lakh PKR take to double?

Use the Rule of 72: divide 72 by your annual rate to get the doubling time. At 12 percent: 72 ÷ 12 = 6 years to double. At 8 percent: 9 years. At 15 percent: 4.8 years. So 1 lakh at 12 percent becomes 2 lakh in roughly 6 years, 4 lakh in 12 years, 8 lakh in 18 years.

Is compound interest halal?

Conventional interest (riba) is haram in Islam. However, the math of compounding is the same as the math of profit-on-profit in Sharia-compliant investments, Murabaha, Diminishing Musharaka, Sukuk, Islamic mutual funds. If you are using this calculator for a Sharia-compliant product, mentally treat the 'rate' field as profit rate and the result as expected profit, not interest. The growth pattern is identical.

Should I include monthly contributions?

Yes if you plan to save regularly. Even a small monthly addition (say 5,000 PKR) compounds significantly over 20 to 30 years because the compounding applies to every contribution, not just the initial principal. Starting early matters more than starting big.

Is the result guaranteed?

For fixed-return products like NSC, Roshan Digital, or bank fixed deposits, results are highly accurate as long as the published rate holds. For market-linked investments (stocks, mutual funds, REITs), actual returns fluctuate year to year, use the calculator to plan against an average expected return, not a guaranteed return.

Compound Interest Calculator

Compound returns in PKR or USD with daily, monthly, quarterly or yearly frequency.

About the Compound Interest Calculator

Calculate compound interest or profit returns over time, with daily, monthly, quarterly, semi-annual or yearly compounding. Built for Pakistani savers modelling Roshan Digital, NSC, Behbood and DSC returns, and equally usable as a halal profit-on-investment calculator for Sukuk, Murabaha and Islamic mutual funds where the math is identical but the framing avoids riba. Pairs with our How Compound Interest Works guide.

Currency:

Initial investment (₨)

Monthly contribution (₨)

Annual interest rate (%)

Time (years)

Compounding frequency

Initial Investment: enter the starting amount of money you have (the principal).
Monthly Contribution: optionally add the amount you plan to save every month to accelerate growth.
Annual Interest Rate: input the expected yearly return or profit rate (for example 6 percent for Roshan Digital USD, 12 percent for Behbood PKR).
Time (Years): enter the duration you plan to keep the money invested.
Compounding Frequency: choose how often interest is added back to the principal (Daily, Monthly, Quarterly, Semi-annually, or Annually).
Result: see your final amount, total profit earned, total contributions, and a year-by-year breakdown.

Frequently Asked Questions

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Compound Interest Calculator

About the Compound Interest Calculator

How to use the Compound Interest Calculator

Frequently Asked Questions

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