Compound Interest Calculator
Project how your money grows with compound interest, contributions, and selectable compounding periods.
About Compound Interest Calculator
Compound interest is the engine behind long-term savings and investing, because interest earns interest on top of itself over time. A compound interest calculator projects what a sum of money will be worth after years of growth, with optional regular contributions and different compounding frequencies.
The core formula is A = P(1 + r/n)^(nt), where P is the principal, r the annual rate, n the compounding frequency, and t the years. More frequent compounding yields slightly more: monthly beats annual, and continuous compounding is the theoretical ceiling. The tool works in nominal returns only and does not subtract inflation, taxes, or fees.
Savers and investors use it to set retirement goals and see the huge effect of starting early, and students use it to compare how contribution frequency changes outcomes. Anyone comparing savings accounts, bonds, or debt repayment plans will find it useful for separating the effect of the rate from the effect of time.
How to Use
- Enter the initial amount, annual rate, and years.
- Add a monthly contribution and pick the compounding frequency.
- Read the future value and total interest earned.
Example
$10,000 at 7% for 10 years, no contributions ≈ $19,671 · Interest: ≈ $9,671
Compounding means interest earns interest. Over 10 years at 7%, the initial $10,000 nearly doubles.
FAQ
Why does compounding frequency matter?
More frequent compounding yields slightly more interest. Monthly beats annual; continuous is the theoretical maximum.
Does this account for inflation?
No, the calculator uses nominal returns. Real returns are roughly the rate minus inflation.
What is the Rule of 72?
Divide 72 by your annual rate to estimate doubling time — about 10 years at 7.2%. This tool computes the exact figure.
How much does compounding frequency really matter?
For most retail products the gap is small. At 6% over 20 years, annual compounding grows $10,000 to about $32,071 while monthly compounding reaches about $33,102. It adds up, but rate and time matter far more.
Does this calculator include inflation?
No, it reports nominal growth. To estimate real purchasing power, subtract your assumed inflation rate from the nominal rate and recompute; many planners use a rough 2-3% inflation assumption.