₹5,00,000 at 8% Compound Interest for 5 Years
See how ₹5,00,000 grows with 8% p.a. compound interest (compounded quarterly) over 5 years, with a year-by-year interest breakdown.
₹5,00,000 invested at 8% p.a. compounded quarterly for 5 years grows to ₹7,42,974 — earning ₹2,42,974 in compound interest (49% on the principal). Compare that to simple interest: the same 8% simple rate would earn only ₹2,00,000 over 5 years. The extra ₹42,974 comes entirely from compounding — interest earning interest on an ever-growing balance.
- Principal
- ₹5,00,000
- Annual interest rate
- 8% p.a.
- Compounding
- quarterly
- Time period
- 5 years
Maturity value
8% p.a.₹7,
after 5 years
Principal
₹5,
Total interest earned
₹2,
+49% gain
| Year | Principal | Split | Interest | Balance |
|---|---|---|---|---|
| 1 | ₹5,00,000 | ₹41,216 | ₹5,41,216 | |
| 2 | ₹5,00,000 | ₹85,830 | ₹5,85,830 | |
| 3 | ₹5,00,000 | ₹1,34,121 | ₹6,34,121 | |
| 4 | ₹5,00,000 | ₹1,86,393 | ₹6,86,393 | |
| 5 | ₹5,00,000 | ₹2,42,974 | ₹7,42,974 |
What the numbers mean
At 8% p.a., quarterly compounding gives an effective annual rate (EAR) of 8.24%, compared to 8% for annual compounding. Monthly compounding at the same rate gives an EAR of 8.30%. Over 5 years, this difference in EAR adds ₹1,949 extra interest when switching from quarterly to monthly compounding.
At 6% annual inflation, ₹7,42,974 in 5 years has the purchasing power of roughly ₹5,55,193 in today's money. Whether this investment beats inflation depends on your assumed inflation rate. Use the Inflation calculator to explore different inflation scenarios.
A bank FD of ₹5,00,000 at 8% p.a. (quarterly compounding, the Indian standard) for 5 years would give approximately ₹7,42,974 — close to this calculation's ₹7,42,974 since both use similar compounding conventions. FD interest is taxable at your income slab rate; use the FD calculator to model the exact post-tax return. See the FD calculator.
With simple interest, ₹5,00,000 at 8% for 5 years earns a flat ₹2,00,000 (₹40000/year). With quarterly compound interest, you earn ₹2,42,974 — ₹42,974 more. The gap grows significantly with time: after 30 years at the same rate, the compounding advantage would be many times larger.
Inflation Calculator
After inflation, ₹7.43L is worth only ₹5.55L in today's money
Simple Interest Calculator
Simple interest on ₹5L at 8% vs compound interest
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This calculator uses the standard compound interest formula A = P × (1 + r/n)^(n×t), where n = 4 (quarterly compounding). Results model a single lump-sum investment; for monthly contributions, use the SIP or RD calculator.