Compound Interest Calculator
Calculate How Your Investments Grow Over Time
Calculate Compound Interest
Investment Growth Projection
Initial Investment:
$0.00
Total Contributions:
$0.00
Interest Earned:
$0.00
Total Future Value:
$0.00
Year-by-Year Breakdown
| Year | Starting Balance | Contributions | Interest | Ending Balance |
|---|
About Compound Interest
Compound interest is the eighth wonder of the world (as attributed to Albert Einstein) because it allows your money to grow exponentially over time. Unlike simple interest which only earns returns on your principal, compound interest earns returns on both your principal and accumulated interest.
This Compound Interest Calculator helps you:
- Project how your investments will grow over time
- Understand the power of regular contributions
- Compare different compounding frequencies
- Plan for financial goals like retirement or education savings
Key factors that affect compound growth:
- Principal amount - The initial investment
- Interest rate - The annual return rate
- Time horizon - How long your money compounds
- Compounding frequency - How often interest is calculated
- Regular contributions - Additional investments over time
Real-World Examples
Example 1: Retirement Savings
Scenario: 25-year-old invests $10,000 at 7% annual return with $200 monthly contributions for 40 years.
Calculation:
- Initial investment: $10,000
- Monthly contributions: $200 × 12 × 40 = $96,000 total
- Compounding: Monthly (12 times per year)
Result: After 40 years, the investment grows to approximately $584,000 with $478,000 from interest alone!
Key Insight: Starting early allows time for compound growth to work magic.
Example 2: Education Fund
Scenario: Parents invest $5,000 initially and add $100 monthly for 18 years at 5% return.
Calculation:
- Initial investment: $5,000
- Monthly contributions: $100 × 12 × 18 = $21,600 total
- Compounding: Monthly
Result: After 18 years, the college fund grows to approximately $43,700 with $17,100 from interest.
Key Insight: Consistent contributions significantly boost the final amount.
Formulas & Algorithms
Basic Compound Interest Formula (Without Contributions)
A = P × (1 + r/n)^(n×t)
Where:
- A = Future value of investment
- P = Principal investment amount
- r = Annual interest rate (decimal)
- n = Number of compounding periods per year
- t = Time in years
Compound Interest With Regular Contributions
A = P × (1 + r/n)^(n×t) + C × [((1 + r/n)^(n×t) - 1] / (r/n)
Where C is the contribution amount per compounding period
Compounding Frequency Impact
More frequent compounding leads to higher returns:
| Frequency | Periods/Year (n) |
|---|---|
| Annually | 1 |
| Semi-annually | 2 |
| Quarterly | 4 |
| Monthly | 12 |
| Weekly | 52 |
| Daily | 365 |
Privacy Note
Your financial privacy is important to us:
- All calculations are performed in your browser - no data is sent to any server
- We do not store any of your input values or calculation results
- No cookies or tracking technologies are used
- Your financial data never leaves your device
This tool works completely offline after loading the page.
Frequently Asked Questions
Simple interest only earns returns on your original principal. Compound interest earns returns on both your principal and accumulated interest, leading to exponential growth over time.
More frequent compounding (daily > monthly > quarterly > annually) leads to slightly higher returns, though the difference diminishes at higher frequencies. The annual percentage yield (APY) accounts for compounding frequency when comparing investments.
Time is often more powerful than rate. For example, at 7% return, money doubles every ~10 years. Starting early with modest returns often beats starting later with higher returns.
Yes, compound interest works the same for investments and debts (like credit cards). Enter the principal as your debt amount and rate as your APR to see how debt grows over time.
These are mathematical projections assuming constant returns. Real-world investments fluctuate, but historical markets average ~7% after inflation. Use conservative estimates for planning.
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