Compound Interest Calculator
Formula
A = P(1 + r/n)^(nt)
Compound interest is calculated on the initial principal and all accumulated interest from previous periods. P is the principal, r is the annual rate, n is the number of times interest compounds per year, and t is the number of years.
How to use
- Enter your Initial Investment in the principal field.
- Set the Annual Rate, then the number of Years.
- Choose how often interest compounds in Compound Frequency.
- Read your Future Value and Total Interest Earned.
Example
A $10,000 investment at a 5% annual rate, compounded monthly for 10 years, grows to $16,470.09. That means you earn $6,470.09 in interest on top of your original deposit.
Frequently Asked Questions
What is compound interest?
Compound interest is interest earned on both your initial deposit and on interest that has already been earned. It makes your money grow faster than simple interest.
How often should interest compound?
More frequent compounding (daily vs annually) yields slightly more interest. Monthly compounding is most common for savings accounts. The difference between monthly and daily is usually small.
What is the Rule of 72?
Divide 72 by your interest rate to estimate how many years it takes to double your money. At 6% interest, your money doubles in about 12 years (72 / 6 = 12).
What's the difference between APR and APY?
APR (annual percentage rate) is the stated yearly rate before compounding is factored in, while APY (annual percentage yield) reflects what you actually earn or pay after compounding within the year. For example, a 5% APR compounded monthly works out to an APY of about 5.12%. When comparing savings accounts, look at APY for the truest picture; when comparing loans, APR is the standard reference.
Does this calculator include regular monthly contributions?
No, this calculator grows a single lump-sum principal and does not add recurring deposits over time. In reality, many people contribute monthly to a savings or retirement account, which dramatically increases the final balance because each new deposit also starts earning compound interest. If you make ongoing contributions, your real future value will be considerably higher than the figure shown here for the initial deposit alone.