Compound Interest Calculator
Enter your starting principal, annual interest rate and term — and optionally a regular contribution added each period. The calculator instantly shows the future value of your savings, the total you paid in and the interest earned. With compound interest, each period's interest is added to the balance and itself earns interest in following periods, which is why monthly compounding always beats annual compounding at the same nominal rate. Pick the compounding frequency from the menu. The contribution field models regular deposits — savings plans, recurring fund purchases, rolled-over deposits. If you deposit at the start of each period, tick the "at the beginning" option: every contribution then earns one extra period of interest. Results are nominal; combine with our inflation calculator to see real purchasing power over long horizons.
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Frequently asked questions
How is compound interest calculated?
Future value = Principal × (1 + r/n)^(n×t), where r is the annual rate, n the number of compounding periods per year and t the term in years. Example: 10,000 at 20% compounded monthly for 5 years → 10,000 × (1 + 0.20/12)^60 ≈ 26,960. Simple interest would only reach 20,000 over the same term.
What is the difference between simple and compound interest?
Simple interest is always charged on the original principal only; compound interest adds earned interest to the balance so it earns interest too. 10,000 at 20% over 5 years: 20,000 with simple interest, but 10,000 × 1.2⁵ = 24,883 with annual compounding. The gap widens rapidly with time.
How much does compounding frequency matter?
At the same nominal rate, more frequent compounding raises the effective annual yield: 20% nominal gives 20% effective with annual compounding, 21.94% with monthly and 22.13% with daily compounding. The effect is modest at low rates but significant at high ones.
What is the Rule of 72?
A quick estimate of how long money takes to double: 72 ÷ annual rate. At 10% your money doubles in about 7.2 years; at 20% in about 3.6 years. It is an approximation for annual compounding — more frequent compounding shortens the time slightly.
Why are regular contributions so powerful?
Each contribution compounds for its own remaining term. Starting from zero and investing 1,000 a month at 20% (compounded monthly) for 10 years, your 120,000 of contributions grows to roughly 376,000 — nearly two thirds of the final balance is interest. Starting early usually beats contributing more later.