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Compound Interest Calculator - Calculate Investment Growth

Free compound interest calculator. Calculate how your investments grow over time with compound interest, monthly contributions, and different compounding frequencies.

iAbout This Calculator

The compound interest calculator helps you understand how your money grows over time through the power of compounding. Unlike simple interest, compound interest earns interest on both your initial investment and previously earned interest, creating exponential growth. Whether you're planning for retirement, saving for a major purchase, or comparing investment options, this calculator shows you exactly how your wealth will accumulate over time. Enter your initial investment, interest rate, time period, and optional monthly contributions to see your projected returns.

?How to Use

  1. 1

    Enter your initial investment amount (the principal you're starting with)

  2. 2

    Input the annual interest rate as a percentage (e.g., 7 for 7%)

  3. 3

    Specify the investment period in years

  4. 4

    Select how often interest compounds (monthly is most common for savings accounts)

  5. 5

    Optionally add a monthly contribution amount if you plan to invest regularly

  6. 6

    Click Calculate to see your projected final balance and growth breakdown

fFormula

A = P(1 + \frac{r}{n})^{nt} + PMT \times \frac{(1 + \frac{r}{n})^{nt} - 1}{\frac{r}{n}}

The compound interest formula calculates the future value A by multiplying the principal P by (1 + r/n) raised to the power of nt, where r is the annual rate, n is compounding frequency, and t is time in years. For regular contributions (PMT), we add the future value of an annuity.

A
Final amount (future value)
P
Principal (initial investment)
r
Annual interest rate (decimal)
n
Number of times interest compounds per year
t
Time in years
PMT
Monthly contribution amount

Examples

Basic Investment Growth

Inputs: principal: 10000, rate: 7, years: 10, frequency: Monthly
$20,096.61

$10,000 invested at 7% for 10 years with monthly compounding grows to over $20,000

With Monthly Contributions

Inputs: principal: 5000, rate: 6, years: 20, frequency: Monthly, contribution: 200
$109,435.24

Starting with $5,000 and adding $200/month at 6% for 20 years builds significant wealth

Retirement Savings

Inputs: principal: 25000, rate: 8, years: 30, frequency: Monthly, contribution: 500
$978,517.89

Long-term investing with consistent contributions can approach $1 million

Use Cases

Retirement Planning

Project how much you'll have saved by retirement age based on current savings and planned contributions

College Savings

Calculate how much to save monthly for your child's education fund over 18 years

Emergency Fund

See how quickly your emergency fund can grow in a high-yield savings account

Investment Comparison

Compare different investment options by adjusting interest rates and compounding frequencies

Frequently Asked Questions

What's the difference between compound and simple interest?
Simple interest only earns interest on your original principal, while compound interest earns interest on both principal and accumulated interest. Over time, compound interest grows exponentially while simple interest grows linearly.
How often should interest compound for best results?
More frequent compounding means more growth. Daily compounding earns slightly more than monthly, which earns more than annually. However, the difference becomes smaller at higher frequencies - daily vs monthly is minimal.
Is 7% a realistic interest rate assumption?
The historical average return of the S&P 500 is about 10% before inflation, or roughly 7% after inflation. For savings accounts, expect 4-5% in high-yield accounts. Always use conservative estimates for planning.
Should I invest a lump sum or make regular contributions?
Mathematically, investing a lump sum earlier beats dollar-cost averaging if markets trend up. However, regular contributions through automatic deposits help build the saving habit and reduce timing risk.

Conclusion

Understanding compound interest is essential for building wealth. This calculator demonstrates why starting early and investing consistently matters so much - the exponential growth of compound interest turns small, regular investments into substantial wealth over time. Use this tool to set realistic savings goals and track your progress toward financial independence.