Plan your financial future with the Compound Interest Calculator. Estimate how much your savings or investment will grow over time with recurring contributions and interest compounding.
Compound interest helps your money grow faster than simple interest by adding earned interest back into the principal over time. This calculator shows you how even small regular deposits can lead to significant long-term gains, depending on your contribution, rate, compounding frequency, and investment duration.
Use it to forecast:
- Retirement savings growth
- Investment account performance
- Wealth-building strategies for passive income
- Long-term returns with reinvested dividends
Just enter your starting balance, monthly contributions, expected interest rate, compounding frequency (daily, monthly, annually), and how long you’ll invest. The calculator will show your future value and total interest earned, all in real-time.
Compound Interest Calculator
Calculate how much your investment will grow with compound interest, based on your initial deposit, monthly contributions, interest rate, and time.
Key Terms
| Term | Meaning |
|---|---|
| Compound Interest | Interest calculated on both the principal and accumulated interest from previous periods. |
| Principal | The initial amount of money invested or deposited. |
| Monthly Contribution | The amount you add to your investment each month. |
| Interest Rate | The annual percentage your investment earns. |
| Compounding Frequency | How often interest is applied (e.g. daily, monthly, yearly). |
| Future Value | The total value of your investment at the end of the time period. |
| Investment Duration | The number of years the money is invested or saved. |
| Monthly Compounding | Interest is calculated and added 12 times a year. |
| Exponential Growth | A pattern where investment value accelerates over time due to compounding. |
| Simple Interest | Interest calculated only on the original principal, not on accumulated interest. |
How Compound Interest Works
Compound interest adds earned interest back into your investment, allowing it to grow exponentially over time.
Each compounding period, the interest is calculated not just on your initial deposit but also on the interest already earned. This creates a snowball effect — the longer your money stays invested, the faster it grows.
For example:
If you invest $10,000 at 5% interest compounded monthly for 10 years with no additional contributions, your total becomes over $16,470, with more than $6,470 from interest alone.
Compounding Frequency Explained
The more frequently interest is compounded, the more you earn.
Different financial products use different frequencies:
- Annually – Once per year
- Quarterly – 4 times per year
- Monthly – 12 times per year (most common)
- Daily – 365 times per year (used by some online savings accounts)
Even if the interest rate stays the same, more frequent compounding results in higher returns.
Tips for Growing Your Money Faster
You can optimise compound growth by adjusting three key variables.
- Start early – Time is the biggest multiplier
- Contribute regularly – Even small monthly deposits accelerate gains
- Reinvest earnings – Don’t withdraw interest if you’re aiming for long-term growth
Try different inputs in the calculator to see how they affect your final amount.
Monthly Contributions vs Lump Sums
Monthly deposits often outperform single lump sums over time.
A person who contributes $200/month for 20 years with 6% interest can outperform someone who deposits $20,000 once and does nothing else. Consistent compounding has a bigger long-term impact than timing the market.
Real-World Uses of Compound Interest
People use compound interest calculators for:
- Retirement savings projections (401k, IRA, Superannuation)
- Investment account growth (ETFs, index funds, robo-advisors)
- Long-term wealth planning (college funds, property deposits)
- FIRE strategy simulations (Financial Independence, Retire Early)
Common Questions About Compound Interest
What’s the formula for compound interest?
The general formula is:
A = P(1 + r/n)nt
Where:
- A = final amount
- P = principal
- r = annual interest rate (decimal)
- n = number of times compounded per year
- t = number of years
Our calculator handles the math for you.
Can compound interest work against you?
Yes. On credit cards and loans, compound interest increases your debt if you don’t pay off the balance. That’s why it’s powerful for savers but dangerous for borrowers.
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Frequently Asked Questions
1. What is compound interest in simple terms?
Compound interest is the process of earning interest on both your original investment and the interest it has already earned. Over time, this leads to exponential growth.
2. How is compound interest calculated?
Compound interest is calculated using the formula:
A = P(1 + r/n)nt,
where:
- A is the final amount
- P is the principal (starting balance)
- r is the annual interest rate
- n is the number of times it compounds per year
- t is the number of years invested
Our calculator automates this for you.
3. What’s the best compounding frequency?
Monthly and daily compounding often give better results than annual or quarterly. The more often interest compounds, the more you earn.
4. What’s the difference between simple and compound interest?
Simple interest only earns returns on the initial amount, while compound interest earns on both the principal and previously earned interest.
5. Can compound interest work against you?
Yes. If you’re borrowing money (like on credit cards), compound interest can increase your debt quickly if you don’t pay it off.
6. Is it better to invest a lump sum or monthly contributions?
Monthly contributions typically outperform a one-time lump sum over time due to the consistent compounding effect. The earlier and more often you invest, the more your money grows.