Compound Interest Calculator
See how your investment grows with compounding, plus optional monthly contributions.
TL;DR — Compound Interest Calculator: A compound interest calculator computes the future value of an investment when earned interest is reinvested each compounding period. Unlike simple interest, compound interest accelerates over time because each period's interest earns interest itself in subsequent periods — the effect Albert Einstein famously called the "eighth wonder of the world".
What is the Compound Interest Calculator?
A compound interest calculator computes the future value of an investment when earned interest is reinvested each compounding period. Unlike simple interest, compound interest accelerates over time because each period's interest earns interest itself in subsequent periods — the effect Albert Einstein famously called the "eighth wonder of the world".
How to use the Compound Interest Calculator
- Enter the initial principal (your starting investment).
- Enter the annual interest rate as a percentage.
- Choose the compounding frequency: annually, semi-annually, quarterly, monthly or daily.
- Enter the investment duration in years.
- Optionally add a recurring monthly contribution.
- Read the final amount, total interest earned and contribution total.
Formula
A = P × (1 + r/n)^(n·t) + PMT × (((1 + r/n)^(n·t) − 1) / (r/n))
A = final amount · P = principal · r = annual interest rate (decimal) · n = compounding periods per year · t = years · PMT = recurring contribution per period (set to 0 if none)
Worked example
Invest $10,000 at 8% annual interest, compounded monthly, for 20 years with no further contributions. A = 10,000 × (1 + 0.08/12)^(240) ≈ $49,268. Interest earned ≈ $39,268 — nearly five times the original principal.
Frequently asked questions
What is compound interest?
Compound interest is interest earned on both the original principal and on previously accumulated interest. It grows an investment exponentially over time, especially over long horizons.
Compound vs simple interest — which earns more?
Compound interest earns more over time. Simple interest accrues only on the original principal, while compound interest reinvests earnings, so the gap widens with each period.
How often should interest be compounded?
More frequent compounding produces a slightly higher return. Daily compounding yields marginally more than monthly, which yields more than annual — but the differences shrink as compounding frequency increases.
What is the rule of 72?
A shortcut: divide 72 by the annual interest rate to estimate the years it takes for an investment to double. At 8% per year, money doubles in roughly 9 years.
Do monthly contributions matter?
Yes. Regular contributions dramatically increase the final amount because each new contribution also begins earning compounded interest immediately.
Is the compound interest formula different for loans?
For loans with monthly repayment, the EMI formula is used. Compound interest in its pure form applies to investments and savings, not amortising debt.