Compound Interest Calculator - Calculate Investment Growth
Calculate how your money grows with compound interest over time. See the power of compounding with our free compound interest calculator.
Compound Interest Calculator
Results
What is Compound Interest?
Compound interest is one of the most powerful forces in investing. It allows your money to grow exponentially over time by earning returns on both your initial investment and the accumulated earnings from previous periods.
This calculator helps with:
- Investment planning - See how investments grow with compound returns
- Savings goals - Calculate time needed to reach financial targets
- Retirement planning - Project long-term retirement savings growth
- Education funding - Plan for college or education expenses
- Wealth building - Understand exponential wealth growth over time
For comprehensive savings planning, you can use our savings calculator to determine how much you need to save regularly to reach your financial goals with compound interest.
If you're interested in broader investment strategies, explore our investment calculator to compare different investment options and see potential returns over time.
Planning for retirement? Our retirement calculator helps you estimate how much you need to save now to maintain your desired lifestyle in retirement, factoring in compound growth.
Simple vs Compound Interest
Simple Interest
Earns interest only on the original principal amount each year.
Compound Interest
Earns interest on both principal and previously earned interest.
Example: $1,000 at 5%
Simple: $50/year forever. Compound: $50, $52.50, $55.13...
Rule of 72
Divide 72 by interest rate to estimate doubling time.
Compounding Frequency Impact
Daily Compounding
Interest calculated and added daily. Highest returns.
Monthly Compounding
Interest calculated monthly. Common for savings accounts.
Annual Compounding
Interest calculated once per year. Lowest compound returns.
How to Use This Calculator
Enter Initial Principal
Starting amount of your investment or savings
Set Interest Rate
Annual percentage rate (APR) of your investment
Specify Time Period
How many years you plan to invest
Choose Compounding
How often interest is calculated and added
Add Contributions
Regular amounts you plan to contribute
View Growth
See projected exponential growth over time
Maximizing Compound Interest
- • Start Early: Time is the most powerful factor in compound growth.
- • Contribute Regularly: Regular contributions accelerate compound growth.
- • Higher Rates: Seek accounts with higher interest rates and frequent compounding.
- • Avoid Withdrawals: Let compound interest work uninterrupted.
- • Tax-Advantaged Accounts: Use IRAs and 401(k)s to maximize growth.
Understanding Your Results
Final Amount
Total value including principal, contributions, and compound interest.
Interest Earned
Pure profit from compound interest - money earned on money.
Total Contributions
Sum of all regular contributions made over time period.
Principal Amount
Original starting amount before any growth or contributions.
Frequently Asked Questions (FAQ)
Q: What is compound interest and how does it work?
A: Compound interest is interest calculated on both principal and previously earned interest, creating exponential growth over time.
Q: How often should interest be compounded?
A: More frequent compounding yields higher returns. Daily compounding beats monthly, which beats annual compounding.
Q: What is the Rule of 72?
A: Divide 72 by your interest rate to estimate how many years it takes for your money to double.
Q: How can I maximize compound interest?
A: Start early, contribute regularly, find higher rates, choose frequent compounding, and avoid early withdrawals.
Q: What's the difference from simple interest?
A: Simple interest only earns on principal. Compound interest earns on both principal and previously earned interest.
Q: What about taxes and inflation?
A: This calculator shows nominal returns. Consider taxes and inflation which reduce real purchasing power over time.