Compound Interest Calculator
Calculate future wealth accumulation, compounding interest gains, and investment growth with regular monthly or annual contributions.
About the Compound Interest Calculator
The Compound Interest Calculator visualizes the power of exponential financial growth over time. Often described as the "eighth wonder of the world," compound interest refers to earning interest not only on your initial deposit (principal), but also on accumulated interest from previous periods.
This calculator enables you to model retirement accounts (such as 401(k)s and IRAs), index fund savings, and fixed deposits with customizable compounding frequencies (daily, monthly, quarterly, or annually) and recurring monthly contributions.
How to Calculate Compound Interest
Enter your starting Principal investment balance.
Specify the projected Annual Interest Rate percentage.
Enter the investment Time Horizon in years.
Optionally specify a recurring Monthly Contribution amount.
Click Calculate to see future portfolio value, total interest earned, and yearly growth trajectories.
Compound Interest Formula with Regular Contributions
Future Value (A) = P × (1 + r/n)ⁿᵗ + PMT × [ ((1 + r/n)ⁿᵗ - 1) / (r/n) ] Total Interest = Future Value - (P + PMT × Total Periods)
P is principal, r is annual nominal rate, n is compounding frequency, t is time in years, and PMT is periodic contribution.
Variable Descriptions
- P
- Initial principal balance
- r
- Annual interest rate in decimal form
- n
- Compounding periods per year (12 = monthly, 1 = annually)
- PMT
- Periodic recurring cash contribution
Worked Example
Important Considerations & Tips
- Time is the greatest factor in compounding: doubling the timeline often more than triples investment returns.
- Historically, broad stock market index funds (like the S&P 500) have averaged ~10% annual nominal returns before inflation.
- Real wealth growth should factor in long-term inflation (~2-3% annually).
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on the initial principal balance and also on the accumulated interest of previous periods, creating compounding exponential growth.
How often does interest compound in savings accounts?
Most modern high-yield savings accounts compound interest daily and credit it to your balance at the end of each month.
What is the Rule of 72?
The Rule of 72 estimates how many years it will take to double your money: divide 72 by your annual interest rate (e.g., at 8%, money doubles in ~9 years).
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