Compound Interest Calculator

Compound interest is the mechanism that makes savings grow exponentially rather than linearly. When interest is added to your balance, the next period's interest is calculated on the new, larger balance — so your money earns interest on interest. This is why long-term investors in Pakistan's mutual funds, national savings schemes and bank deposits consistently outperform short-term savers over decades.

The compounding frequency matters enormously. A deposit earning 10% annually with interest credited monthly ends up worth more than one with interest credited yearly, because each month's credited interest immediately starts earning its own interest. This calculator lets you switch between yearly, monthly and daily compounding so you can see the difference for yourself — daily compounding can add a meaningful edge over a long tenure.

For Pakistani savers, the practical question is where to put money to benefit from compounding: bank profit rates (such as saving accounts and term deposits), national savings certificates, mutual funds, or the Naya Pakistan certificates for overseas Pakistanis. All of them compound, but at different rates and frequencies — enter each rate into this calculator to compare the future value side by side.

The calculator assumes a fixed annual rate for the entire period. In reality, rates move with the State Bank of Pakistan's policy rate. A conservative approach is to run the calculation at a lower rate than today's to stress-test your plan, and to treat the result as a projection rather than a guarantee.

The key lesson from compound interest is time: starting just five years earlier can double your final balance at typical rates because the later years of compounding contribute the most growth. Use this calculator to see exactly what a decade of patience is worth.