Compound Interest Calculator

Initial Principal

Annual Addition

Years

Rate (%)

Compounding

Addition Timing

Future Value

Principal $0.00

Total Interest $0.00

Annual Breakdown

Year	Interest Earned	Total Contributions	End Balance

The Power of Compound Interest

Discover how regular deposits and the snowball effect of compounding returns can help accelerate your long-term wealth creation. Use our interactive calculator to project and visualize your future financial milestones.

How Compound Interest Works

Unlike simple interest, which is calculated only on your initial deposit, compound interest is calculated on your initial principal plus all of the accumulated interest from previous periods. This creates a compounding effect, where your savings growth curves upward exponentially over time.

To maximize your compound interest growth, focus on three key variables:

1. Time: The sooner you start saving, the longer your investment has to snowball. Even small amounts can grow to large sums given enough time.
2. Compounding Frequency: The more frequently interest is calculated and added to your balance (daily, weekly, monthly, quarterly, or annually), the faster your balance will compound.
3. Consistent Additions: Adding regular contributions to your principal balance gives the compound interest formula more capital to compound, significantly increasing your future value.

The Compound Interest Formula

To calculate the future value of an investment with periodic contributions, we use the following equation:

A = P(1 + ^r⁄_n)^nt + PMT × [(1 + ^r⁄_n)^nt − 1] ⁄ (^r⁄_n) × (1 + ^r⁄_n)^p

A = Future Value of the investment
P = Principal amount (initial deposit)
PMT = Periodic contribution amount
r = Annual interest rate (decimal)
n = Compounding frequency per year
t = Number of years to compound
p = 1 for Beginning additions, 0 for End

Frequently Asked Questions

What is the difference between simple and compound interest? +

Simple interest is calculated solely on your initial principal. For example, a $10,000 investment at 5% simple interest earns exactly $500 every single year. Compound interest earns returns on both your principal and the accumulated interest. In the second year of compounding, you earn 5% on $10,500 ($525), and so on. Over several decades, this difference creates a massive divergence in overall wealth accumulation.

How does the compounding interval affect my total return? +

The more frequently your interest compounds, the more money you make because interest is added to your balance sooner. Daily compounding yields slightly more than weekly, which compounding yields more than monthly, and so on. Our calculator allows you to compare intervals from annual all the way to daily, so you can see this compounding efficiency firsthand.

What is the "Rule of 72"? +

The Rule of 72 is a handy mathematical shortcut used to estimate how long it will take for your investment to double at a given annual interest rate. By dividing 72 by your expected annual rate of return, you get the approximate number of years needed. For example, at a 6% interest rate, your money will double in approximately 12 years (72 ⁄ 6 = 12 years).

How does addition timing (beginning vs. end of period) impact my returns? +