Compound Interest Calculator
Calculate how your money grows with compound interest over time. Enter your principal, annual interest rate, compounding frequency, and optional regular contributions to see total future value, interest earned, and a full year-by-year growth breakdown — with a visual showing how interest eventually overtakes your original principal.
Enter your investment details
Start with a preset or enter your own values. Add regular contributions to model a savings account, investment portfolio, or retirement fund.
Compound interest formula
Without contributions:
A = P × (1 + r/n)^(n×t)
With contributions:
A = P(1+r/n)^(nt) + PMT × [((1+r/n)^(nt)−1) / (r/n)]
The Rule of 72
Divide 72 by the annual interest rate to estimate how many years it takes to double your money. At 7% → 72÷7 ≈ 10.3 years to double. At 10% → 7.2 years. A useful mental shortcut.
Compound interest formula — explained
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest (which only applies to the principal), compound interest grows exponentially over time.
A = 10,000 × (1 + 0.07÷12)^(12×20) = $40,073
Frequently asked questions
What is compound interest?
Compound interest is interest earned on both the original principal and the accumulated interest from previous periods. Each period, the interest is added to the balance, and the next period's interest is calculated on the larger amount. This creates exponential growth — the longer the time horizon, the more dramatic the compounding effect becomes.
What is the difference between compound and simple interest?
Simple interest is calculated only on the original principal: Interest = P × r × t. Compound interest is calculated on principal plus accumulated interest each period. Over long periods, compound interest produces significantly higher returns. At 7% over 30 years, $10,000 grows to $76,123 with compound interest but only $31,000 with simple interest.
How does compounding frequency affect returns?
More frequent compounding produces slightly higher returns because interest starts earning interest sooner. The difference between annual and daily compounding on the same nominal rate is small — typically fractions of a percent. The effective annual rate (EAR) captures the true annual return after accounting for compounding frequency.
What is the Rule of 72?
The Rule of 72 is a quick mental shortcut: divide 72 by the annual interest rate to estimate how many years it takes to double your money. At 6%, money doubles in approximately 12 years (72÷6). At 9%, approximately 8 years. It is an approximation that works well for rates between 6% and 10%.
Does this calculator account for inflation?
No. This calculator uses nominal rates and does not adjust for inflation. To model real (inflation-adjusted) returns, subtract the expected inflation rate from your annual interest rate before entering it. For example, if the nominal rate is 7% and inflation is 2.5%, use 4.5% as the real rate of return.
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Disclaimer
This calculator is for educational and planning purposes only. It does not account for taxes on interest or investment gains, inflation, variable returns, investment fees, or early withdrawal penalties. Actual investment returns vary and are not guaranteed. Always consult a qualified financial advisor before making investment decisions.