Compound Interest Calculator
Compound interest formula: A = P(1 + r/n)^(nt), where A = final amount, P = principal, r = annual rate, n = compounds per year, t = years. Compound interest grows exponentially faster than simple interest.
Calculate compound interest with regular contributions. See how your investments grow over time with detailed year-by-year breakdown.
What do you want to calculate?
Calculate how much your investment will grow to
Initial Investment
$
Monthly Contribution
$
Annual Interest Rate
%
Time Period
years
Compound Frequency
Future Value
$106,639.02
Initial Investment
$10,000.00
Investment Period
10 years
Total Contributions
$70,000.00
Total Interest Earned
$36,639.02
Growth Breakdown
66%
34%
Contributions Interest
The Power of Compound Interest
- Start early - time is your biggest advantage
- More frequent compounding = slightly higher returns
- Regular contributions dramatically boost final value
- Rule of 72: divide 72 by interest rate to estimate doubling time
How to Use
- Enter your value in the input field
- Click the Calculate/Convert button
- Copy the result to your clipboard
Frequently Asked Questions
- What is compound interest?
- Compound interest is interest earned on both the initial principal and previously accumulated interest. Unlike simple interest (calculated only on principal), compound interest grows exponentially. The formula is A = P(1 + r/n)^(nt), where n is compounding frequency per year.
- How does compounding frequency affect returns?
- More frequent compounding yields higher returns. $10,000 at 6% for 10 years: Annual compounding = $17,908, Monthly = $18,194, Daily = $18,221. The difference is the "effective" vs "nominal" rate. Daily compounding at 6% nominal equals about 6.18% effective annual rate.
- What is the Rule of 72?
- The Rule of 72 estimates how long it takes to double your money: divide 72 by the interest rate. At 6% interest, money doubles in 72/6 = 12 years. At 8%, it doubles in 9 years. At 12%, it doubles in 6 years. This is a quick mental math approximation.
- How much should I save for retirement?
- A common guideline is to save 15% of pre-tax income for retirement. Starting at 25 with $500/month at 7% average return yields ~$1.2 million by 65. Starting at 35 with the same savings yields only ~$567,000. Starting early is crucial due to compound interest.
- What is the difference between APR and APY?
- APR (Annual Percentage Rate) is the simple interest rate without compounding. APY (Annual Percentage Yield) includes compounding effects. A 6% APR compounded monthly equals 6.17% APY. For savings, look at APY (higher is better). For loans, compare APR (lower is better).