Compound interest is interest earned on interest. Each period, the balance you are earning on gets a little bigger, so the next period's interest is a little bigger too. Repeat for long enough and the curve gets steep.
Time beats rate
Two investors, both put aside ₹5,000 a month at 10%.
- Aarav starts at 25 and invests for 35 years — total contributions ₹21 lakhs, ending value ≈ ₹1.9 crore.
- Rohan starts at 35 and invests for 25 years — total contributions ₹15 lakhs, ending value ≈ ₹67 lakhs.
Aarav paid in ₹6 lakhs more than Rohan, but finished with nearly three times the pile — because he gave compound interest an extra decade to work.
Try your own numbers with our compound interest calculator.