Compound Interest Calculator

See how your savings grow over time with compound interest. Enter your principal, rate, and time to calculate future value.

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The compound interest formula

A = P(1 + r/n)nt

A — Future value (what you end up with)

P — Principal (initial deposit)

r — Annual interest rate (as a decimal, e.g. 6% = 0.06)

n — Number of times interest compounds per year

t — Number of years

With regular monthly contributions C, each deposit also earns compound interest from the time it is added, significantly boosting your total return over long periods.

Compound interest tips

Start early. Time is the most powerful factor in compound interest. Starting 10 years earlier can have a bigger impact than doubling your contributions.

Stay consistent. Regular monthly contributions, even small ones, leverage dollar-cost averaging and compounding together.

Higher frequency helps. Monthly compounding earns more than annual, but the difference between monthly and daily is minimal for most savings accounts.

Reinvest returns. Compound interest only works if you leave the interest in the account. Withdrawing interest turns it into simple interest.

Rule of 72 — quick doubling estimates

3% rate: ~24 years to double

5% rate: ~14.4 years to double

7% rate: ~10.3 years to double

10% rate: ~7.2 years to double

12% rate: ~6 years to double

What is Compound Interest?

Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest (which only earns on the original amount), compound interest creates a snowball effect where your money grows exponentially over time. Albert Einstein reportedly called it "the eighth wonder of the world."

The formula is A = P(1 + r/n)^(nt), where P is principal, r is annual rate, n is compounding frequency per year, and t is time in years. For example, $10,000 at 5% compounded monthly for 10 years becomes $10,000 × (1 + 0.05/12)^(12×10) = $16,470.09 — you earned $6,470.09 in interest without adding any additional money.

The key insight: time matters more than the amount. Starting with $5,000 at age 25 and earning 7% annually gives you $74,872 by age 65. Waiting until age 35 to invest the same $5,000 yields only $38,061. Starting 10 years earlier nearly doubles the result.

Compounding Frequency Matters

The more frequently interest compounds, the more you earn. Here's $10,000 at 5% for 10 years with different compounding frequencies:

FrequencyFinal ValueInterest Earned
Annually (1x/yr)$16,288.95$6,288.95
Quarterly (4x/yr)$16,436.19$6,436.19
Monthly (12x/yr)$16,470.09$6,470.09
Daily (365x/yr)$16,486.65$6,486.65

The difference between annual and daily compounding on $10,000 is about $198 over 10 years. While meaningful, the impact is much larger with bigger sums and longer time periods.

The Power of Regular Contributions

Compound interest becomes truly powerful when combined with regular contributions. Investing $200 per month at 7% annual return for 30 years results in $72,000 in total contributions but a final value of approximately $243,994 — the interest earned ($171,994) is more than double what you put in.

This is the principle behind 401(k) plans, IRAs, and other retirement accounts. Consistent contributions over decades, combined with compound growth, can turn modest monthly savings into substantial wealth. The earlier you start, the more time compound interest has to work in your favor.