Interest Calculator · Simple / Compound / SIP · With Effective Annual Rate
Three modes in one · simple / compound (annual/quarterly/monthly/daily) / SIP (monthly contributions). Outputs total, interest, effective annual rate, and year-by-year breakdown. Formulas per PBoC & Investopedia. All local.
Overview
Interest differs dramatically by compounding. Simple interest is the floor (savings bottom). Compound (annual/quarterly/monthly/daily) boosts yield nonlinearly. SIP (monthly installments) is the long-term standard for mutual-fund drip investment. All formulas cross-checked with PBoC rate tables and Investopedia. Output includes total, interest earned, and the EAR — the real number often obscured in marketing. Fully local.
How to use
- Pick mode (simple / compound / SIP).
- Enter principal, annual rate (%), years.
- Choose compounding frequency (annual / quarterly / monthly / daily) for compound; enter monthly contribution for SIP.
- See final value, interest, EAR, and a yearly breakdown in real time.
Formula
Simple: I = P·r·t; A = P·(1 + r·t)
Compound: A = P·(1 + r/n)^(n·t); EAR = (1 + r/n)^n − 1
SIP: FV = P·(1 + i)^(12t) + PMT · [((1+i)^(12t) − 1) / i]
n in {1, 4, 12, 365}. Ref: PBoC 2015; Investopedia.
Common scenarios
100k · 3y · 2.75%
Simple = 8250; Monthly compound ≈ 8605 (EAR 2.785%); 355 extra by picking compound.
2000/mo × 10y × 6% SIP
FV ≈ 327757 (24k invested, ~88k interest, 36.6% return).
Checking vs CD vs Wealth
50k × 1y · checking 0.3% = 150; CD 1.75% = 875; R2 wealth 4% (quarterly) ≈ 2032.
FAQ
How much does compound beat simple?
Tiny over 1y, exponential over decades. 100k at 5% — 10y diff ≈ 14.7k; 30y diff ≈ 200k (compound 448k vs simple 250k). Einstein's "eighth wonder."
Why is daily compound barely better than monthly?
Because `(1 + r/n)^n` converges to `e^r`. At 5% rate — annual 1.0500, monthly 1.0512, daily 1.0513. The gain from monthly→daily is ~0.01%. Rate and time matter more than frequency.
What is effective annual rate (EAR)?
EAR = true annualized return after compounding. Nominal 5% monthly → EAR 5.116%. Watch out for "7-day" or "30-day" yields — those aren't EAR.
Why is SIP always "fixed-amount, not fixed-shares"?
Dollar-cost averaging — fix amount, not shares. Fixed shares reintroduces timing. Tool assumes stable yield; real funds fluctuate.
Is my data uploaded?
No — inputs are computed locally in your browser and never transmitted.
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