Compound Interest Calculator
Use this calculator to estimate how your savings or investments grow over time using compound interest.
What Is Compound Interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Over time, compounding accelerates the growth of your money significantly compared to simple interest.
Compound Interest Formula
The standard formula is: A = P(1 + r/n)^(nt)
- P = Principal (initial amount)
- r = Annual interest rate (as a decimal)
- n = Number of times interest compounds per year
- t = Time in years
- A = Final amount
Example
If you invest $10,000 at 7% annually, compounded monthly, for 20 years, your investment grows to approximately $40,388 — nearly 4 times your initial amount.
Frequently Asked Questions
How often does interest compound?
Common compounding frequencies are daily, monthly, quarterly, and annually. More frequent compounding results in slightly higher returns over the same time period.
What is the difference between compound and simple interest?
Simple interest is calculated only on the principal. Compound interest also factors in previously earned interest, resulting in exponentially faster growth over time.
When should I start investing?
The earlier the better. Starting at 25 vs. 35 can result in dramatically more wealth at retirement due to the extended compounding period. Even small amounts invested early can outpace larger amounts invested later.