Compound Interest Calculator
Calculate investment growth with compound interest
Future Value
$144,573
Total Contributions
$58,000
Interest Earned
$86,573
+149.3%
Visualization
Growth Projection
- Total Value
- Contributions
Final Value
$144,573
Total Contributed
$58,000
Earnings
+$86,573
Results are projections based on consistent contributions and rates.
Results are estimates for informational purposes only and do not constitute financial advice. Actual savings may vary based on interest rate changes, contribution consistency, and account terms.
Compound Interest Calculator Formula
A is the final amount including interest. P is the principal (initial investment). r is the annual interest rate as a decimal. n is the number of times interest compounds per year. t is the number of years. This formula shows how money grows exponentially when interest earns interest.
How the Compound Interest Calculator Works
- 1Enter your initial investment amount (principal)
- 2Add any regular monthly contributions you plan to make
- 3Input the expected annual interest rate or return
- 4Select the compounding frequency (monthly is most common)
- 5Set the investment time period in years
- 6View the final balance and breakdown of contributions versus earnings
Compound Interest Calculator Key Terms
- Compound Interest
- Interest calculated on both the initial principal and the accumulated interest from previous periods, creating exponential growth.
- Principal
- Your initial investment amount before any interest is earned.
- Compounding Frequency
- How often interest is calculated and added to your balance—daily, monthly, quarterly, or annually.
- Time Value of Money
- The concept that money today is worth more than the same amount in the future due to its earning potential.
Compound Interest Calculator Tips
- •Start investing early—time is the most powerful factor in compound growth
- •Regular contributions amplify compound growth significantly more than lump sums alone
- •Reinvest dividends and interest to maximize compounding effect
- •Higher compounding frequency slightly increases returns (daily vs. annual)
- •Use the Rule of 72: divide 72 by your interest rate to estimate doubling time
When to Use This Compound Interest Calculator
- ✓Planning long-term retirement savings
- ✓Projecting investment portfolio growth
- ✓Comparing savings account offers with different rates
- ✓Understanding the power of early and consistent investing
- ✓Calculating future value of education savings
Compound Interest Calculator Examples
Retirement Savings Example
Starting with $10,000 and adding $500/month at 7% annual return grows to $632,408 in 30 years. Total contributions: $190,000.
Emergency Fund Growth
Building an emergency fund: $1,000 initial plus $200/month at 4.5% becomes $14,652 in 5 years.
Long-Term Investment
A $50,000 investment with $1,000 monthly contributions at 8% grows to $823,104 over 20 years.
Understanding Compound Interest in Depth
Compound interest is often called the eighth wonder of the world, and understanding its mechanics is crucial for building wealth over time. Unlike simple interest, which is calculated only on the principal, compound interest generates returns on your returns—creating exponential rather than linear growth.
The Power of Time
Consider two investors: Investor A starts at age 25, invests $5,000 yearly for 10 years, then stops—total contribution of $50,000. Investor B starts at 35, invests $5,000 yearly for 30 years—total contribution of $150,000. At age 65, assuming 7% returns, Investor A has more money despite contributing one-third as much. This is the power of early compounding.
Regular Contributions vs. Lump Sum
While a large lump sum has more time to compound, regular contributions are often more practical and can actually outperform in certain scenarios through dollar-cost averaging. The key is consistency—automatic monthly investments remove emotion from the equation.
Real Returns vs. Nominal Returns
This calculator shows nominal returns. Real returns subtract inflation, giving you purchasing power growth. If your investments earn 7% and inflation is 3%, your real return is approximately 4%. For long-term planning, consider using real returns for more accurate projections.
Compounding Frequency Impact
More frequent compounding yields slightly higher returns. At 5% annual interest, $10,000 grows to $16,289 with annual compounding over 10 years, but $16,470 with daily compounding—a difference of about 1%. While meaningful over decades, the impact is modest compared to rate and time factors.
Compound Interest Calculator FAQs
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Marcus Chen
Financial Analysis SpecialistMarcus has over 12 years of experience in quantitative finance and personal financial planning. He specializes in loan analysis, investment modeling, and consumer debt strategies. His methodologies incorporate industry-standard financial mathematics used by major lending institutions.
Editorial Standards: All calculations use industry-standard financial formulas. Content is reviewed for mathematical accuracy and updated to reflect current market conditions. This tool provides estimates for informational purposes and does not constitute financial advice.