Compound Interest Calculator
See how your money grows with compound interest over time.
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Frequently Asked Questions
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest (which is calculated only on the principal), compound interest grows exponentially over time.
Formula: A = P(1 + r/n)^(nt), where A = final amount, P = principal, r = annual rate, n = compounding frequency, t = years.
For example, $10,000 at 7% compounded monthly for 20 years grows to approximately $40,388.
The Rule of 72 is a quick mental math shortcut: divide 72 by the annual return rate to estimate how many years it takes to double your money.
Examples: at 8% → doubles in ~9 years. At 6% → doubles in ~12 years. At 12% → doubles in ~6 years.
You can verify this with the compound interest calculator above by setting your principal, target = 2× principal, and adjusting the period.
Yes, but the effect is smaller than most people assume. More frequent compounding yields slightly more. Example — $10,000 at 7% for 20 years:
Annually: ~$38,697 | Monthly: ~$40,388 | Daily: ~$40,495
The difference between daily and annual compounding is less than 2%. The variables that matter far more are the rate and the time horizon — starting early is far more impactful than compounding frequency.
APR (Annual Percentage Rate) is the nominal rate without accounting for compounding within the year.
APY (Annual Percentage Yield) is the effective rate that reflects compounding. APY ≥ APR always.
Example: 6% APR compounded monthly → APY = (1 + 0.06/12)^12 − 1 = 6.168%.
Banks advertise APY on savings accounts (higher number looks better) and APR on loans (lower number looks better). This calculator uses APR as the input — the growth shown already accounts for compounding.
Regular contributions dramatically amplify compound growth. Example at 7% for 30 years:
$10,000 lump sum only: grows to ~$76,123
$10,000 + $200/month: grows to ~$313,000 — over 4× more
This is because each monthly contribution immediately starts earning compound interest. Starting early and contributing consistently is more important than the amount of any single investment.