Compound Interest Calculator
Calculator Inputs
The amount of money you’re starting with
Amount you’ll add regularly to your investment
Expected annual return on your investment
Compare best-case and worst-case scenarios
How often interest is calculated and added to your balance
How long you plan to keep your money invested
Calculation Results
Growth Over Time
Year-by-Year Breakdown
| Year | Starting Balance | Contributions | Interest | Ending Balance |
|---|
How this Compound Interest Calculator Works
This compound interest calculator helps you project the future value of your investments by accounting for compound growth. The formula used in this calculator is:
Standard Compound Interest Formula with Contributions:
A = P × (1 + r/n)(n×t) + PMT × [((1 + r/n)(n×t) – 1) / (r/n)]
Where:
- A = Future value of the investment
- P = Principal investment amount (initial balance)
- r = Annual interest rate (as a decimal)
- n = Number of times interest compounds per year
- t = Number of years the money is invested
- PMT = Additional contribution per compounding period
For example, if you invest $1,000 at an annual interest rate of 5% compounded monthly for 10 years with $100 monthly contributions:
- P = $1,000
- r = 0.05
- n = 12
- t = 10
- PMT = $100
Your investment would grow to approximately $16,470 after 10 years, with $13,000 in total contributions and $3,470 in earned interest.
Inputs Explained
- Initial Investment: The starting amount of money you’re investing.
- Recurring Contribution: Regular deposits you make to your investment account.
- Contribution Frequency: How often you make additional contributions (monthly, weekly, annually, or none).
- Annual Interest Rate: The expected annual return on your investment, expressed as a percentage.
- Compounding Frequency: How often interest is calculated and added to your balance (daily, monthly, quarterly, semi-annually, or annually).
- Time Horizon: The number of years you plan to keep your money invested.
Example Scenarios
Retirement Savings
Starting with $10,000 and contributing $500 monthly at 7% annual return compounded monthly for 30 years would grow to approximately $612,000.
College Fund
Starting with $5,000 and contributing $200 monthly at 6% annual return compounded monthly for 18 years would grow to approximately $93,000.
Emergency Fund
Starting with $1,000 and contributing $100 monthly at 2% annual return compounded monthly for 5 years would grow to approximately $7,200.
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on the initial principal and also on the accumulated interest of previous periods. It’s often described as “interest on interest” and can cause wealth to grow exponentially over time.
How often should interest compound?
Generally, more frequent compounding leads to higher returns. Daily compounding yields slightly more than monthly, which yields more than annual compounding. However, the difference becomes more significant over longer time periods and with higher interest rates.
What’s the difference between APR and APY?
APR (Annual Percentage Rate) doesn’t account for compounding within the year, while APY (Annual Percentage Yield) does. APY will be higher than APR when interest compounds more than once per year.
Can I use this calculator for loans?
While this calculator is designed for investments, the same mathematical principles apply to loans with compound interest. However, for accurate loan calculations, we recommend using a dedicated loan calculator.
How does contribution frequency affect results?
More frequent contributions (like monthly instead of annually) allow your money to start compounding sooner, which can significantly increase your final balance over long periods.
What’s the best way to maximize compound interest?
To maximize compound interest: start early, contribute regularly, reinvest your earnings, and choose investments with competitive returns while considering your risk tolerance.
Download / Share
Use the “Export CSV” button to download your calculation results as a spreadsheet for further analysis. The “Copy Permalink” button creates a shareable link with your specific inputs, allowing you to save or share your calculation scenario.
Compound Interest Calculator
If you want to see how your money can grow faster with compounding, our Compound Interest Calculator makes it simple. Unlike simple interest, which only pays on the original amount, compound interest lets you earn interest on both your principal and previously earned interest. Over time, this snowball effect can turn modest savings into significant wealth.
What is a Compound Interest Calculator?
A Compound Interest Calculator is a financial tool that helps you estimate how much your money will grow when interest is compounded. It considers:
- Principal (P): Your starting amount.
- Interest Rate (r): Annual rate in percent or decimal form.
- Time (t): Number of years your money grows.
- Compounding Frequency (n): How often interest is added (annual, quarterly, monthly, daily, or continuously).
The calculator applies the compound interest formula to show your final balance (A) and the interest earned (I).
The Compound Interest Formula
The standard formula is:
A = P(1 + r/n)^(nt)
Where:
- A = Final amount (principal + interest)
- P = Principal amount
- r = Annual interest rate (decimal, so 5% = 0.05)
- n = Compounding frequency per year
- t = Time in years
Interest Earned (I): I = A – P
Types of Compounding
The frequency of compounding has a huge impact on growth.
| Compounding Type | Formula | Example |
|---|---|---|
| Annual | A = P(1 + r)^t | Interest added once a year |
| Quarterly | A = P(1 + r/4)^(4t) | Interest added 4 times per year |
| Monthly | A = P(1 + r/12)^(12t) | Interest added 12 times per year |
| Daily | A = P(1 + r/365)^(365t) | Interest added 365 times per year |
| Continuous | A = Pe^(rt) | Interest compounded infinitely often |
Example: Using a Compound Interest Calculator
Let’s say you invest $10,000 at 5% annual interest, compounded monthly, for 10 years.
Formula:
A = 10,000(1 + 0.05/12)^(12×10)
A = 10,000(1.0041667)^120
A ≈ $16,470
Result:
- Final Balance: $16,470
- Interest Earned: $6,470
Compared to simple interest ($5,000 over 10 years), compounding earned you an extra $1,470.
After seeing how your money compounds, discover how other interest calculations compare:
- Use the Periodic Compound Interest Calculator to adjust for different compounding frequencies.
- Find equivalent annual growth using the Effective Annual Rate Calculator.
- Compare with non-compounding cases using the Simple Interest Calculator.
- Estimate borrowing costs precisely with the APR Calculator.
Real-Life Applications of a Compound Interest Calculator
1. Savings Accounts & CDs
Banks often use daily or monthly compounding. A calculator shows how much faster daily compounding grows compared to annual.
2. Investments & 401(k)s
For long-term retirement savings, compounding over decades creates exponential growth.
3. Loans & Credit Cards
Compound interest also works against you. Credit cards charge interest on unpaid balances plus accrued interest, making debts grow quickly.
Continuous Compounding Formula
With continuous compounding, interest is added an infinite number of times per year. The formula is:
A = Pe^(rt)
Example:
$1,000 invested at 6% for 5 years:
A = 1,000e^(0.06 × 5) ≈ $1,349.86
This is slightly higher than daily compounding because the interest grows without limit.
Compound Interest Calculator vs. Simple Interest Calculator
| Feature | Simple Interest | Compound Interest |
|---|---|---|
| Formula | I = P × r × t | A = P(1 + r/n)^(nt) |
| Growth | Linear | Exponential |
| Example (10 years @ 5% on $10,000) | $5,000 interest | $6,470 interest |
| Use Cases | Auto loans, bonds | Savings accounts, credit cards, investments |
Takeaway: Compounding builds wealth faster, but it can also make debt grow faster if unpaid.
How to Use the Compound Interest Calculator
- Enter Principal (P): Your starting balance.
- Set Interest Rate (r): Annual rate as percent or decimal.
- Choose Compounding Frequency (n): Annual, quarterly, monthly, daily, or continuous.
- Enter Time (t): Duration in years (convert months into years by dividing by 12).
- Calculate: The tool will return your final balance and interest earned.
Example: Find the Interest Rate from Growth
Say your $30,000 investment grows to $33,000 in 2.5 years, compounded daily. What’s the rate?
Formula:
r = n[(A/P)^(1/(nt)) – 1]
r = 365[(33,000/30,000)^(1/(365×2.5)) – 1]
r ≈ 0.03813 (3.813%)
Result: The investment yields 3.813% annually with daily compounding.
Compound Interest Calculator in Excel
You can also use spreadsheets like Excel or Google Sheets.
Future Value Formula:
=ROUND(P * (1 + (r/n))^(n*t),2)
Example:
- Principal = 10,000
- Rate = 3%
- Compounding = Quarterly (4)
- Time = 5 years
Result: $11,611.84
Why Compound Interest Matters
- Wealth Building: The earlier you start saving, the more compounding works in your favor.
- Debt Growth: Credit card balances can spiral because of compounding.
- Financial Planning: A compound interest calculator helps you compare scenarios and choose wisely.
The Compound Interest Calculator is more than a math tool—it’s a window into how money grows or debt accumulates. By adjusting inputs like time, rate, and frequency, you can see how small changes dramatically affect outcomes.
For savers and investors, compounding is your best ally. For borrowers, it’s a force to manage carefully. Either way, understanding and using a compound interest calculator gives you a clear financial advantage.
Further Reading
Cite this content, page, or calculator as:
Zaheer, Ahmed “Compound Interest Calculator” at https://calculatorcave.com/calculators/financial/compound-interest-calculator/ from CalculatorCave, https://calculatorcave.com – Online Calculators