Compound Interest Calculator
See how compound interest grows your money over time with different compounding frequencies.
Starting amount
Additional amount added each month
Expected annual return
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What is Compound Interest?
Compound interest is the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods. It is often described as "interest on interest" and is a powerful force for growing wealth over time.
How it Works
The basic formula for compound interest with regular contributions is complex, but for a single lump sum, it is:
- A = Future Value
- P = Principal Investment
- r = Annual Interest Rate (decimal)
- n = Number of compounding periods per year
- t = Number of years
Example Calculation
If you invest $10,000 at an annual rate of 7% for 20 years, contributing $500 monthly:
- Principal: $10,000
- Total Contributions: $120,000
- Total Interest: ~$166,000
- Future Value: ~$296,000
Frequently Asked Questions
How does compounding frequency affect growth?
The more frequently interest is compounded (e.g., daily vs. annually), the faster your money grows, because you earn interest on your interest sooner.
What is the Rule of 72?
The Rule of 72 is a shortcut to estimate how long it will take to double your investment. Divide 72 by the annual interest rate (e.g., 72 / 7 = ~10.3 years).
Does this calculator account for taxes?
No, this calculator shows pre-tax growth. Investment earnings may be subject to capital gains or income tax depending on your location and account type.
What is a realistic interest rate?
Historically, the stock market (S&P 500) has returned about 10% annually (7% after inflation). High-yield savings accounts typically offer 3-5%.
Can I lose money?
Compound interest calculations assume a fixed positive return. In real investments like stocks, values fluctuate and you can lose principal.