Compound Interest Calculator
See how your investment grows over time with compound interest and regular contributions — free.
What is Compound Interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, compounding accelerates growth — the longer you invest, the faster your money grows. Einstein allegedly called it "the eighth wonder of the world."
What is the compound interest formula?
A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the annual interest rate, n is the number of compounding periods per year, and t is time in years. Our calculator also factors in regular monthly contributions.
How does compounding frequency affect returns?
The more frequently interest is compounded, the more you earn. Daily compounding yields slightly more than annual compounding for the same nominal rate. For long investment horizons, the difference becomes meaningful.
What is the Rule of 72?
Divide 72 by your annual interest rate to estimate how many years it takes to double your investment. At 7% annually, your money doubles roughly every 72 ÷ 7 ≈ 10.3 years.
Why does inflation matter?
Inflation erodes purchasing power. The "Real Value" figure adjusts your future balance for inflation, showing what your money will actually be worth in today's dollars.
About the Compound Interest Calculator
Our free compound interest calculator shows how your investment grows over time when interest is earned not just on your principal, but also on previously accumulated interest. This "interest on interest" effect — compounding — is one of the most powerful forces in personal finance. Enter an initial investment, an annual interest rate, compounding frequency, and time period to see both the final balance and a year-by-year growth chart.
Albert Einstein is often (perhaps apocryphally) quoted as calling compound interest "the eighth wonder of the world." Whether or not he said it, the mathematics are undeniably powerful: €10,000 invested at 7% annually for 30 years grows to over €76,000 — without adding a single additional euro.
How Compound Interest Works
Simple interest calculates interest only on the original principal. Compound interest calculates interest on the principal plus all previously accumulated interest. The more frequently interest is compounded, the faster the balance grows.
Formula: A = P × (1 + r/n)^(nt) where A = final amount, P = principal, r = annual rate (as decimal), n = compounding periods per year, t = time in years.
Compounding Frequencies
- Annually — Interest added once per year. Common for savings bonds and some investments.
- Quarterly — Interest added 4 times per year. Common for many savings accounts.
- Monthly — Interest added 12 times per year. Common for mortgages and many bank accounts.
- Daily — Interest added 365 times per year. Common in high-yield savings accounts and money market accounts.
Common Uses
- Retirement planning — See how regular contributions grow over 20–40 years to estimate retirement savings.
- Education savings — Calculate how much to invest now to reach a target amount for a child's education in 10–18 years.
- Debt analysis — Understand how credit card debt or a loan balance grows if minimum payments are made.
- Investment comparison — Compare different savings rates, compounding frequencies, or contribution strategies.
Frequently Asked Questions
What is the Rule of 72?
Divide 72 by the annual interest rate to estimate how many years it takes to double your money. At 6%, money doubles in approximately 72 ÷ 6 = 12 years.
Can I include regular monthly contributions?
Yes. The calculator supports both lump-sum calculations and scenarios with regular monthly or annual contributions.
Does the calculator account for inflation?
Not automatically. To adjust for inflation, subtract the expected inflation rate from the interest rate to find the "real" rate of return.
Is compound interest only for investments?
No. Compound interest also applies to debt. Credit card balances that are not paid in full compound monthly, which is why carrying a balance is very expensive over time.