Compound Interest Calculator
Discover how your savings and investments can grow with the power of compound interest.
Investment Growth Summary
What Is Compound Interest?
Compound interest is often called the "eighth wonder of the world" β and for good reason. Unlike simple interest, which is calculated only on the original principal, compound interest is calculated on the principal plus all previously accumulated interest. This means your money earns interest on top of interest, creating an exponential growth effect over time.
The compound interest formula is A = P(1 + r/n)^(nt), where A is the future value, P is the principal investment, r is the annual interest rate (as a decimal), n is the number of times interest compounds per year, and t is the number of years. The more frequently interest compounds, the more your investment grows β though the difference between monthly and daily compounding is typically modest.
The Power of Time and Consistency
Time is the most powerful factor in compound interest. An investor who starts at age 25 will accumulate significantly more wealth by retirement than someone who starts at age 35, even with the same contribution amount. This is because each year of compounding builds on all previous years of growth. Even small, consistent contributions can grow into substantial sums over several decades.
For example, $10,000 invested at a 7% annual return will grow to approximately $76,123 in 30 years β without adding a single extra dollar. If you also contribute $200 per month, that total jumps to over $320,000. Use this calculator to explore different scenarios and understand how time, rate, and frequency affect your financial future.