Compound Interest Calculator
Calculate compound interest growth on your savings and investments
Your starting investment amount
Additional amount invested each month
Expected yearly return rate
Investment duration in years
How often interest is compounded
About This Calculator
Compound interest is often called the "eighth wonder of the world" because of its powerful ability to grow wealth over time. Unlike simple interest, which only earns interest on your initial investment, compound interest earns interest on both your principal AND your accumulated interest. This creates exponential growth that can turn modest savings into substantial wealth. Our compound interest calculator shows you exactly how your money can grow through the power of compounding. Whether you're planning for retirement, saving for a major purchase, or just curious about investment growth, this tool helps you visualize your financial future. Key features of our compound interest calculator: - Calculate growth with any starting amount - Add regular monthly contributions - Choose your compound frequency (daily, monthly, quarterly, annually) - See total contributions vs. interest earned - Understand the power of time in the market The earlier you start investing, the more time compound interest has to work its magic. Even small amounts invested consistently can grow into substantial sums over decades.
How to Use
- 1Enter your initial investment (starting amount)
- 2Add monthly contributions if you plan to invest regularly
- 3Enter the expected annual interest rate or return
- 4Select how many years you plan to invest
- 5Choose how often interest compounds
- 6View your projected future value and total interest earned
Formula
A = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) - 1) / (r/n)]Compound interest means you earn interest on both your original investment and on previously earned interest. This creates exponential growth over time.
FAQ
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. This creates a snowball effect where your money grows faster over time because you're earning "interest on interest."
Simple interest is calculated only on the original principal amount. Compound interest is calculated on the principal plus all previously earned interest. Over time, compound interest generates significantly more wealth because each interest payment increases the base for future calculations.
Historically, the stock market has returned about 7-10% annually after inflation. Savings accounts offer 1-5%, depending on the economy. Conservative bonds average 3-5%. Use rates appropriate to your actual or planned investments.
More frequent compounding yields higher returns because interest is calculated and added to your balance more often. Daily compounding earns slightly more than monthly, which earns more than annual. However, the difference is usually small for typical interest rates.
Regular contributions benefit from dollar-cost averaging and give every dollar time to compound. Contributing $200/month over 30 years often outperforms investing $50,000 all at once because of the sustained compounding effect.
Start early, invest consistently, reinvest all returns, minimize fees and taxes, choose investments with higher returns (accepting appropriate risk), and avoid withdrawing funds. Time and consistency are the keys to maximizing compound growth.
This calculator shows gross returns before taxes. Actual returns will be lower after taxes on gains. Consider using tax-advantaged accounts like 401(k)s or IRAs to defer or eliminate taxes on your compound growth.