Calculate your investment growth with compound interest
A = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) - 1) / (r/n)]
Time is your greatest asset. Starting early gives your investments more time to grow exponentially.
Regular monthly contributions can significantly boost your returns over time.
Compound interest takes time. The longer you invest, the more powerful the compounding effect.
Don't put all eggs in one basket. Spread investments across different assets.
Compound interest is often called "the eighth wonder of the world" — and for good reason. Unlike simple interest where you only earn on your original principal, compound interest allows you to earn interest on both your initial investment AND on previously accumulated interest. This creates a powerful snowball effect that accelerates your wealth growth over time.
When you use a compound interest calculator, you're seeing how this exponential growth can transform modest savings into substantial wealth. Our investment calculator helps you visualize exactly how your money grows with each compounding period.
The magic of compound interest lies in earning returns on your returns. Each time interest is calculated, it's added to your principal, and future interest is calculated on this larger amount.
A = P(1 + r/n)^(nt)
Example: $10,000 invested at 7% annual return, compounded monthly for 20 years:
A = 10,000 × (1 + 0.07/12)^(12×20) = $40,387.39
That's $30,387.39 in interest earnings — more than 3x your original investment!
Understanding the difference between simple and compound interest is crucial for making smart financial decisions.
| Feature | Simple Interest | Compound Interest |
|---|---|---|
| Calculation basis | Principal only | Principal + accumulated interest |
| Growth pattern | Linear (steady) | Exponential (accelerating) |
| $10K at 5% for 30 years | $25,000 | $43,219 |
| Best for | Short-term loans | Long-term investments & savings |
The frequency at which interest compounds affects your total returns. More frequent compounding means more growth opportunities for your money.
Interest calculated once per year. Common for bonds and some savings accounts.
Interest calculated four times yearly. Used by many investment funds.
Most common for savings accounts and mortgages. Good balance of frequency.
Maximum compounding effect. Used by high-yield savings accounts.
Example: $10,000 at 8% for 20 years — Annual: $46,610 | Monthly: $48,754 | Daily: $49,268. Daily compounding earns $2,658 more than annual!
Time is the most powerful factor in compound interest. Starting early can be more valuable than contributing more money later. This savings calculator example demonstrates why:
🎯 Result: Early investor wins with $23,988 more — despite contributing $72,000 less!
Maximize your investment growth with these proven strategies:
Set up automatic monthly transfers. Consistency beats timing the market.
Got a 5% raise? Increase your investment by 2-3%. You still take home more while supercharging growth.
Enable dividend reinvestment (DRIP) for compound growth on steroids.
Max out 401(k), IRA, or HSA before taxable accounts. Tax-deferred growth compounds faster.
A 2% fee vs 0.05% fee can cost 40%+ of returns over 30 years. Choose low-cost index funds.
Quick mental math to estimate how long it takes for your investment to double:
Years to Double = 72 ÷ Interest Rate
The S&P 500 historical average is approximately 10% annually before inflation. For conservative planning, use 7-8% after accounting for inflation.
For savings accounts, yes — but rates are typically low (~0.5-5%). For investments, returns vary yearly but historically average out over decades.
A common rule of thumb is 15% of gross income. Start with at least your employer's 401(k) match, then increase gradually.
Daily compounding yields the highest returns, but monthly is most common. The difference is relatively small compared to the impact of time and contribution amount.
Our investment calculator adds monthly contributions at the end of each month, then applies compound interest based on your selected frequency.
Yes — credit card debt and loans use compound interest too. A $5,000 credit card balance at 20% APR can cost thousands in interest. Pay off high-interest debt first!