Compound Interest Calculator
Calculate the power of compound interest on your investments and savings
Compound interest is the eighth wonder of the world. This calculator helps you understand how your money can grow exponentially over time when interest is earned on both the principal and previously earned interest. See the dramatic difference compound interest can make to your financial future.
Growth Visualization
How Compound Interest Works
Formula Explanation
Compound Interest Formula:
A = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) - 1) / (r/n)]
- • A = Final amount
- • P = Principal (initial investment)
- • r = Annual interest rate (decimal)
- • n = Number of times interest compounds per year
- • t = Number of years
- • PMT = Regular payment amount
Example Calculation
$10,000 initial investment at 7% annually for 30 years:
- • Year 10: $19,672
- • Year 20: $38,697
- • Year 30: $76,123
- • Total interest earned: $66,123
- • Growth multiple: 7.6x
The power of compound interest increases exponentially over time!
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. It's "interest on interest" that can significantly accelerate wealth building over time.
How often should interest compound?
More frequent compounding generally results in higher returns. Daily compounding typically provides the best results, followed by monthly, quarterly, and annual compounding.
Why start investing early?
Time is the most powerful factor in compound interest. Starting early, even with smaller amounts, can result in significantly more wealth than starting later with larger amounts due to the exponential nature of compounding.
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