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Compound Interest Calculator
See how your investments grow with compound interest
Want to learn more? Read our guide: How Compound Interest Works
Why Use This Tool?
- Visualize how your savings or investments grow over time with compound interest.
- Compare different compounding frequencies to choose the best savings account.
- Plan long-term financial goals like retirement, education, or emergency funds.
Formula
A = P(1 + r/n)^(nt), where A = final amount, P = principal, r = annual rate (decimal), n = compounding frequency per year, t = years. For example, $10,000 at 7% compounded monthly for 10 years: A = 10000(1 + 0.07/12)^(12x10) = $20,097.
How to Use
- Enter the initial principal amount
- Enter the annual interest rate (%)
- Enter the investment period in years
- Select compounding frequency (monthly, quarterly, yearly)
- View final amount and total interest earned
FAQ
What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. It makes your money grow faster than simple interest, where interest is only calculated on the principal.
How does compounding frequency affect returns?
More frequent compounding (e.g., monthly vs. yearly) results in slightly higher returns because interest is added to the principal more often. However, the difference is usually small for moderate interest rates.
What is the Rule of 72?
The Rule of 72 is a quick way to estimate how long it takes to double your money. Divide 72 by the annual interest rate. For example, at 6% interest, your money doubles in approximately 12 years.
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 earned interest, resulting in faster growth over time.
How much will $10,000 grow in 10 years at 7% interest?
With annual compounding at 7%, $10,000 grows to approximately $19,672 in 10 years. With monthly compounding, it grows to about $20,097. The power of compounding accelerates growth over time.