Compound Interest Calculator — Calculate Investment Growth
Determine the future value of your investments by calculating compounded growth with optional monthly contributions.
Compound Interest Calculator
Calculates compounded growth and optional monthly contributions.
About this tool
The Compound Interest Calculator shows how investments grow over time when interest is earned on both the principal and previously accumulated interest. Enter a starting amount, interest rate, compounding frequency, and time period — the calculator shows the final value, total interest earned, and year-by-year growth.
Compound interest is the fundamental mechanism behind long-term wealth building. The longer money compounds, the more dramatically it grows.
Common use cases
- Projecting the future value of savings accounts and fixed deposits
- Calculating how much a lump sum investment will grow over time
- Comparing the effect of different compounding frequencies (daily vs monthly)
- Understanding why starting to invest early makes such a large difference
How to use
- Enter the principal (starting amount you invest or deposit).
- Enter the annual interest rate as a percentage.
- Select compounding frequency: daily, monthly, quarterly, or annually.
- Enter the investment period in years.
- Optionally add a monthly contribution to see the effect of regular additional investments.
- Review final value, total principal invested, and total interest earned.
This page is available at /tools/compound-interest-calculator/.
Understanding the result
- The compound interest formula: A = P(1 + r/n)^(nt). Where A = final amount, P = principal, r = annual rate (decimal), n = compounding periods per year, t = years.
- Daily compounding (n=365) produces slightly more than monthly (n=12) which produces more than annual (n=1). The difference is small for typical savings rates but meaningful over long periods.
- The power of time: $10,000 at 8% compounded annually becomes $21,589 in 10 years, $46,610 in 20 years, and $100,627 in 30 years.
- Monthly contributions dramatically accelerate growth. Adding $200/month to the example above turns $100,627 into $299,127 after 30 years.
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FAQ
What is the difference between simple and compound interest?
Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus all previously accumulated interest. Over time, compound interest grows exponentially while simple interest grows linearly. A $10,000 investment at 8% for 20 years earns $16,000 in simple interest but $36,610 in compound interest.
How often does compound interest compound?
It depends on your bank or investment. Common frequencies: daily (most savings accounts), monthly (many bonds and loans), quarterly (some corporate bonds), annually (some fixed deposits). More frequent compounding produces slightly more interest.
What is the Rule of 72?
Divide 72 by the annual interest rate to estimate how many years it takes for money to double. At 8%, money doubles every 9 years (72÷8). At 6%, every 12 years. At 4%, every 18 years.
Should I use this calculator for loans?
Yes. Loans also use compound interest. A credit card at 24% APR compounds monthly — the same formula shows how quickly a balance grows if you only pay the minimum.
What interest rate should I use for projections?
For conservative savings: 4–6%. For stock market index funds: 7–10% long-term average (historical). For high-yield savings: current rate from your bank. For inflation-adjusted projections, subtract the expected inflation rate (2–3%) from your nominal rate.