APY Calculator

APY (Annual Percentage Yield) includes compounding effect and shows what you earn. APR (Annual Percentage Rate) is simple interest without compounding and shows what you pay on loans. For investments, look at APY. For loans, compare APR. APY is always higher than or equal to stated interest rate due to compounding.

Yes! More frequent compounding always gives higher APY from the same interest rate. Monthly compounding beats quarterly, quarterly beats half-yearly. The difference might seem small but compounds significantly over years. For 8% rate: yearly = 8% APY, monthly = 8.30% APY. Over 20 years on ₹10 lakhs, that's ₹2.4 lakh extra!

Regular savings accounts offer 2.7-4% APY. High-yield savings accounts offer 6-7% APY. Fixed deposits offer 6-8% APY depending on tenure and compounding. Liquid mutual funds offer 4-6% APY. Compare APY, not just interest rates. Monthly compounded FD will have slightly higher APY than quarterly compounded at same stated rate.

Technically no - APY measures yield on positive interest rates. However, after accounting for inflation, your 'real APY' can be negative. If investment gives 6% APY but inflation is 7%, your real APY is -1% - you're losing purchasing power. Always consider inflation-adjusted APY for long-term planning.

Banks offer different compounding frequencies for FDs. Monthly compounding gives highest APY, followed by quarterly, half-yearly, and yearly. On 5-year FD of ₹10 lakhs at 7% - monthly compounding gives ₹14.20 lakhs (7.23% APY), yearly gives ₹14.03 lakhs (7% APY). Choose monthly compounding when available.

Mutual funds don't advertise APY as returns vary. Debt funds historically give 6-8% APY. Equity funds give 12-15% APY long-term but with volatility. Liquid funds offer 4-6% APY. Unlike FDs, mutual fund returns are not guaranteed and fluctuate. APY is calculated post-facto based on actual performance.

Yes, for equity-oriented investments. Equity mutual funds historically deliver 12-15% APY over 10+ years. Diversified stock portfolios can achieve 10-12% APY. However, this comes with market risk and volatility. Fixed-income instruments rarely give 10% APY in current interest rate environment. Risk and return are correlated.

Always choose monthly compounding when available - it gives higher APY. On same 8% rate: monthly = 8.30% APY, quarterly = 8.24% APY, yearly = 8% APY. The difference multiplies over time. Over 20 years on ₹10 lakhs, monthly compounding gives ₹2+ lakh more than yearly compounding.

Stock APY is trickier. Dividend Yield = Annual Dividend / Stock Price. But total APY includes both dividends AND capital appreciation. If stock gives 4% dividend yield and 8% price appreciation, total APY is approximately 12%. However, stock returns fluctuate yearly unlike fixed APY of deposits.

Real APY = Nominal APY - Inflation Rate. If FD gives 7% APY and inflation is 6%, real APY is only 1% - your purchasing power increased by just 1%. For wealth creation, aim for real APY of at least 3-5%. This is why equity (12-15% APY) beats inflation better than FD (6-7% APY).

Generally yes. Banks offer higher interest rates (and thus higher APY) for longer FD tenures. 1-year FD might give 6.5% APY, while 5-year FD gives 7.5% APY. However, consider liquidity needs. Premature withdrawal often results in penalty, reducing your effective APY. Balance higher APY with liquidity requirements.

Review APY quarterly for fixed-income investments (FDs, bonds). Check if better rates are available elsewhere. For equity investments, calculate APY annually - don't obsess over short-term fluctuations. If consistently getting below-expected APY after 3-5 years, consider switching to better-performing alternatives. Focus on long-term APY trends.