Compound Interest Calculator
Calculate how your investments grow over time with compound interest. See the power of compounding on savings and investments.
Results after 10 years
Final Balance
$106,639
Total Contributions
$70,000
Interest Earned
$36,639
View yearly breakdown
| Year | Balance | Contributions | Interest |
|---|---|---|---|
| 0 | $10,000.00 | $10,000.00 | $0.00 |
| 1 | $16,919.19 | $16,000.00 | $919.19 |
| 2 | $24,338.58 | $22,000.00 | $2,338.58 |
| 3 | $32,294.31 | $28,000.00 | $4,294.31 |
| 4 | $40,825.16 | $34,000.00 | $6,825.16 |
| 5 | $49,972.70 | $40,000.00 | $9,972.70 |
| 6 | $59,781.53 | $46,000.00 | $13,781.53 |
| 7 | $70,299.43 | $52,000.00 | $18,299.43 |
| 8 | $81,577.68 | $58,000.00 | $23,577.68 |
| 9 | $93,671.22 | $64,000.00 | $29,671.22 |
| 10 | $106,639.02 | $70,000.00 | $36,639.02 |
About compound interest
Compound interest is calculated on the initial principal and the accumulated interest from previous periods. More frequent compounding results in higher returns. Monthly contributions are added after each compounding period.
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 returns on the original amount, compound interest earns returns on returns -creating exponential growth over time.
Albert Einstein reportedly called compound interest “the eighth wonder of the world,” noting that those who understand it earn it, while those who don’t pay it.
The compound interest formula
The formula for compound interest is:
A = P(1 + r/n)^(nt)
Where:
- A = Final amount
- P = Principal (initial investment)
- r = Annual interest rate (as decimal)
- n = Number of times interest compounds per year
- t = Time in years
For example, $10,000 invested at 7% annual interest compounded monthly for 10 years:
A = 10,000 × (1 + 0.07/12)^(12×10) = $20,096.61
Simple vs compound interest
| Type | How it works | Growth pattern |
|---|---|---|
| Simple | Interest on principal only | Linear |
| Compound | Interest on principal + accumulated interest | Exponential |
With simple interest, $10,000 at 7% for 10 years yields $17,000. With compound interest (monthly), the same investment yields $20,096.
The difference grows dramatically over longer periods.
Compounding frequency
Interest can compound at different intervals:
| Frequency | Times per year | Effect on $10,000 at 7% over 10 years |
|---|---|---|
| Annually | 1 | $19,671.51 |
| Semi-annually | 2 | $19,897.89 |
| Quarterly | 4 | $20,015.90 |
| Monthly | 12 | $20,096.61 |
| Daily | 365 | $20,137.26 |
| Continuously | ∞ | $20,137.53 |
More frequent compounding produces higher returns, though the difference diminishes as frequency increases.
The rule of 72
A quick way to estimate how long it takes to double your money:
Years to double ≈ 72 / Interest rate
At 6% interest: 72 / 6 = 12 years to double At 8% interest: 72 / 8 = 9 years to double At 12% interest: 72 / 12 = 6 years to double
The power of starting early
Time is the most powerful factor in compound interest. Consider two investors:
Investor A starts at 25, invests $5,000/year for 10 years, then stops. Investor B starts at 35, invests $5,000/year for 30 years until retirement.
At 7% annual return:
- Investor A contributes $50,000, ends with ~$602,000
- Investor B contributes $150,000, ends with ~$540,000
Despite investing three times less money, Investor A ends up with more -simply by starting earlier.
Factors that affect compound growth
Interest rate - Higher rates dramatically increase final amounts. Even small differences compound significantly over decades.
Time - The longer your money compounds, the more dramatic the growth. Starting early matters more than investing large amounts later.
Compounding frequency - More frequent compounding produces higher returns, though the effect is modest compared to rate and time.
Regular contributions - Adding money regularly amplifies compound growth. Consistent investing, even in small amounts, builds wealth over time.
How this tool works
Enter your principal amount, interest rate, time period, and compounding frequency to calculate your investment’s future value. The calculator shows both the final amount and total interest earned. Powered by a QuantCDN Edge Function.