Compound Interest Calculator
Calculate how your investments grow with compound interest and regular contributions. See a detailed year-by-year breakdown.
How to Use the Compound Interest Calculator
See how your money can grow over time:
- Enter your initial investment — The starting amount of money (principal).
- Enter the annual interest rate — The expected annual rate of return as a percentage.
- Enter the time period — How many years you plan to invest or save.
- Select compound frequency — Choose how often interest is compounded: daily, monthly, quarterly, or annually.
- Enter monthly contributions — Any regular monthly addition to your investment (optional, use 0 for none).
- Click "Calculate" — View your final amount, total interest earned, and a detailed year-by-year breakdown.
About Compound Interest
Compound interest is often called the "eighth wonder of the world" because of its powerful ability to grow wealth over time. Unlike simple interest, which is calculated only on the original principal, compound interest is calculated on the principal plus all previously accumulated interest.
The compound interest formula is: A = P(1 + r/n)nt, where A is the final amount, P is the principal, r is the annual interest rate (decimal), n is the number of compounding periods per year, and t is the number of years.
When regular monthly contributions are included, the future value of those contributions is calculated using the annuity formula, which accounts for each contribution earning compound interest from the time it is deposited. The combination of compound interest and consistent contributions creates a powerful wealth-building strategy that benefits enormously from starting early and investing consistently over long periods.
Frequently Asked Questions
Compound interest is interest earned on both the initial principal and the accumulated interest from previous periods. This creates exponential growth, as each period's interest is larger than the last. For example, $1,000 at 10% annually becomes $1,100 after year 1, $1,210 after year 2, and $1,331 after year 3.
More frequent compounding produces higher returns because interest is calculated on a growing balance more often. For example, $10,000 at 5% for 10 years yields approximately $16,289 with annual compounding versus $16,487 with daily compounding — a difference of about $198 in this scenario.
The formula is A = P(1 + r/n)^(nt), where A is the final amount, P is the initial principal, r is the annual interest rate as a decimal, n is the number of compounding periods per year, and t is the number of years. For monthly compounding at 6%: n = 12 and r = 0.06.
Monthly contributions significantly accelerate wealth growth because each contribution also earns compound interest. For example, investing $200/month at 7% for 30 years results in approximately $227,000 in contributions growing to about $566,000 — more than doubling your money through compound interest alone.