Calculate Compound Interest
Compound Interest Calculator
See how your savings grow over time with the power of compound interest. Add monthly contributions, adjust rates, and compare scenarios side by side.
How to Use This Calculator
- Enter initial deposit — Your starting investment or savings amount.
- Enter monthly contribution — How much you add each month.
- Enter annual interest rate — Expected annual return (7% is the historical stock market average).
- Enter time period — How many years you plan to invest.
- Select compounding frequency — How often interest is calculated.
- Click Calculate — See your total balance, total contributions, and interest earned.
What Is Compound Interest?
Compound interest is interest earned on both your original deposit and on previously earned interest. Unlike simple interest (which only earns on the principal), compound interest creates an accelerating growth effect — the longer you leave your money, the faster it grows.
P = Initial principal
r = Annual interest rate (decimal)
n = Compounding frequency per year
t = Time in years
PMT = Periodic contribution
The Rule of 72
A quick way to estimate how long it takes to double your money: 72 ÷ interest rate = years to double. At 7% return, your money doubles in about 10.3 years. At 10%, it doubles in 7.2 years.
Why Starting Early Matters
Compound interest rewards time above all else. Consider two people:
- Person A: Invests $200/month from age 25 to 35 (10 years, $24,000 total), then stops. At 7% return, by age 65: ~$260,000
- Person B: Invests $200/month from age 35 to 65 (30 years, $72,000 total). At 7% return, by age 65: ~$243,000
Person A invested 3x less money but ended up with more — because their money had 30 extra years to compound. Time in the market beats timing the market.
Compounding Frequency Comparison
More frequent compounding means slightly higher returns:
- Annually: Interest calculated once per year
- Semi-annually: Twice per year (slightly more than annual)
- Quarterly: 4 times per year (common for bank CDs)
- Monthly: 12 times per year (common for savings accounts)
- Daily: 365 times per year (slightly more than monthly)
The difference between annual and daily compounding on $10,000 at 5% over 30 years is about $1,500. It matters, but the interest rate and time matter far more than compounding frequency.