Compound Interest Calculator
See how your money grows over time with compound interest. Enter your starting amount, interest rate, time period, and optional monthly contributions to calculate your future balance with a detailed year-by-year breakdown.
Supports daily, monthly, quarterly, and annual compounding frequencies
Calculate Compound Interest
Starting investment amount
Expected annual rate of return
Number of years to grow
How often interest is compounded
Additional amount added each month (optional, use 0 for none)
How to Use This Calculator
Enter Your Investment Details
Type your initial principal amount, annual interest rate, and the number of years you plan to invest. Choose a compounding frequency (daily, monthly, quarterly, or annually).
Add Monthly Contributions
Optionally enter a monthly contribution amount to see how regular investing accelerates your growth. Set to 0 if you only want to calculate growth on the initial principal.
Review Your Growth
See your final balance, total interest earned, total contributions, and a detailed year-by-year table showing how your money compounds over time.
How Compound Interest Works
A = P(1 + r/n)^(n*t)The compound interest formula calculates the future value (A) of an investment based on the initial principal and accumulated interest. Each variable represents:
P = Principal (initial investment)r = Annual interest rate (as decimal, e.g. 7% = 0.07)n = Compounding periods per year (12 for monthly)t = Time in yearsA = Final amount (principal + interest)When regular monthly contributions (PMT) are added, the formula for the contribution portion is:
FV = PMT x [((1 + r/n)^(n*t) - 1) / (r/n)]Key concepts that affect compound growth:
- Higher frequency compounding (daily vs annually) produces slightly more interest because interest earns interest sooner
- Time is the most powerful factor - doubling your time period more than doubles your returns due to exponential growth
- Regular contributions dramatically increase final value because each new deposit begins compounding immediately
- The Rule of 72: divide 72 by your interest rate to estimate how many years it takes to double your money
This calculator uses a month-by-month simulation to accurately model the interaction between monthly contributions and the chosen compounding frequency, rather than using the simplified formula which can produce slightly different results with contributions.
Quick Growth Reference
| Rate | 5 Years | 10 Years | 20 Years | 30 Years |
|---|---|---|---|---|
| 3% | $11,616.17 | $13,493.54 | $18,207.55 | $24,568.42 |
| 4% | $12,209.97 | $14,908.33 | $22,225.82 | $33,134.98 |
| 5% | $12,833.59 | $16,470.09 | $27,126.40 | $44,677.44 |
| 6% | $13,488.50 | $18,193.97 | $33,102.04 | $60,225.75 |
| 7% | $14,176.25 | $20,096.61 | $40,387.39 | $81,164.97 |
| 8% | $14,898.46 | $22,196.40 | $49,268.03 | $109,357.30 |
| 10% | $16,453.09 | $27,070.41 | $73,280.74 | $198,373.99 |
| 12% | $18,166.97 | $33,003.87 | $108,925.54 | $359,496.41 |
Based on $10,000 initial investment, monthly compounding, no additional contributions
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest (calculated only on the principal), compound interest grows exponentially over time because you earn "interest on interest." This is why compound interest is often called the most powerful force in finance.
How does compounding frequency affect my returns?
The more frequently interest is compounded, the more you earn. Daily compounding yields slightly more than monthly, which yields more than quarterly or annually. For example, $10,000 at 5% for 10 years yields $16,288.95 with annual compounding, $16,470.09 with monthly, and $16,486.65 with daily compounding. The difference is most noticeable at higher interest rates and longer time periods.
What is the compound interest formula?
The standard compound interest formula is A = P(1 + r/n)^(nt), where A is the final amount, P is the principal (initial investment), r is the annual interest rate (as a decimal), n is the number of times interest is compounded per year, and t is the number of years. When regular contributions are included, the future value of the annuity component is added: FV = PMT x [((1 + r/n)^(nt) - 1) / (r/n)].
How do monthly contributions affect compound interest growth?
Regular monthly contributions dramatically accelerate wealth building thanks to compound interest. Even small monthly additions can have a huge impact over time. For example, investing $100/month at 7% annual return for 30 years results in approximately $121,997 - but your total contributions were only $36,000. The remaining $85,997 is compound interest earned on your growing balance.
What is the Rule of 72?
The Rule of 72 is a quick estimation method: divide 72 by your annual interest rate to find approximately how many years it takes to double your money. At 6% interest, your money doubles in about 12 years (72 / 6 = 12). At 8%, it doubles in about 9 years. This rule works best for rates between 4% and 12% and assumes no additional contributions.
Important Disclaimer
This calculator provides estimates for educational and informational purposes only. It assumes a fixed interest rate and does not account for taxes, inflation, investment fees, or market volatility. Actual investment returns will vary. Past performance does not guarantee future results. Consult a qualified financial advisor before making investment decisions.