Compound Interest Calculator
Find out how an investment or savings account grows when interest compounds on itself. Add regular contributions to see the full picture, then explore the year-by-year breakdown.
How compounding works
The key mechanism is that each period's interest gets added to the balance, so next period's interest is calculated on a larger amount. This is why the growth curve bends upward over time rather than rising in a straight line.
A straightforward example: $10,000 invested at 7% per year, compounded monthly, grows to roughly $20,097 after 10 years — more than doubling with no additional contributions. Over 30 years, the same investment reaches approximately $81,000. The extra 20 years do not add $20,000 linearly; they add $61,000, because the compounding effect accelerates as the balance grows.
The formula
Where A is the final amount, P is the principal, r is the annual rate as a decimal, n is the number of compounding periods per year, and t is the time in years. When adding regular contributions, each payment also compounds for the remaining time in the investment.
Why regular contributions matter so much
Adding even a modest monthly contribution transforms the outcome. On a $10,000 starting balance at 7% for 30 years, the balance reaches $76,000 with no extra contributions. Adding just $100 per month brings it to roughly $188,000 — almost two and a half times more. The contributions themselves total $36,000, but compounding on those contributions adds a further $76,000 on top of the original growth.
Common questions
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With simple interest, you only earn interest on the original principal. With compound interest, you earn interest on both the principal and the interest already accumulated. Over time this creates exponential growth — Albert Einstein reportedly called it the eighth wonder of the world.
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More frequent compounding produces slightly higher returns. Daily compounding yields marginally more than monthly, which yields more than annually. In practice, the difference between daily and monthly compounding is small — the interest rate matters far more.
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Divide 72 by the annual interest rate to estimate how many years it takes to double your money. At 6% annual interest, 72 ÷ 6 = 12 years. At 9%, it doubles in 8 years. It is a useful mental shortcut for comparing investment options.
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No — it shows nominal (face value) growth. To find real returns after inflation, subtract the inflation rate from your interest rate before entering it. If your investment earns 7% and inflation runs at 3%, the real rate of return is approximately 4%.
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The effective annual rate accounts for compounding within the year. A 12% rate compounded monthly is not the same as 12% compounded annually — the EAR is actually 12.68%. The calculator shows this figure in the results.