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Investing

Compound Interest Calculator

Calculate how your investments grow over time with compound interest. Add monthly contributions to accelerate growth. See the power of compounding with different frequencies.

Future Value
$106,214
Total Principal
$70,000
Total Interest
$36,214

The Power of Compound Interest

Compound interest is often called the eighth wonder of the world. You earn interest on your principal, then on the accumulated interest. Over decades, this creates exponential growth. The longer your time horizon, the more dramatic the effect.

Einstein reportedly called compound interest "the most powerful force in the universe." Even small contributions grow significantly over time. Start early, be consistent, and let compounding work for you.

The Compound Interest Formula

Principal growth

The calculator applies the standard compound interest formula: A = P × (1 + r/n)^(n×t), where P is your principal, r is the annual rate as a decimal, n is the number of times interest compounds per year, and t is the number of years.

Monthly contributions

If you add a monthly contribution, its future value is calculated separately using the future value of an annuity formula, compounding each deposit at the monthly rate (r/12) for however many months remain until the end of the term, then adding that total to the principal's growth.

Total interest

Total interest is simply the future value minus everything you put in: principal plus the sum of all monthly contributions. This isolates exactly how much of your final balance came from growth rather than your own deposits.

Compounding Frequency Options

Annually (n = 1)

Interest is added once per year. Common for simple bond and CD illustrations.

Semiannually (n = 2)

Interest is added twice a year. Used by many government and corporate bonds.

Quarterly (n = 4)

Interest is added four times a year. Common for some certificates of deposit.

Monthly (n = 12)

Interest is added every month. The typical schedule for savings accounts and most retirement account illustrations.

Daily (n = 365)

Interest is added every day, the highest frequency offered here and the one that yields the most growth for a given nominal rate. Many high-yield savings accounts compound daily even though they credit interest monthly.

Common Use Cases

Retirement account projections: Model how a 401(k) or IRA balance could grow over decades with regular monthly contributions and an assumed average return.
Education savings: Estimate how a 529 plan or similar education fund grows if you contribute a fixed amount every month until a child reaches college age.
Comparing savings products: Run the same principal and time period at different rates to see how a 4% high-yield savings account compares with a 7% long-term investment assumption.
Debt-free investing decisions: Weigh whether extra cash is better used paying down a loan or invested, by comparing the loan's interest rate against a realistic compounding projection.

Assumptions and Limitations

This calculator assumes a fixed, unchanging rate of return for the entire time period, which is realistic for a savings account or CD but not for stocks or funds, whose returns vary year to year. Results are nominal figures and do not subtract taxes, account fees, or inflation, so the real purchasing power of the future value will be lower than the number shown, especially over long time horizons.

How this is calculated

Method: Compound interest formula A = P(1 + r/n)^(nt), plus future value of contributions

Growth without contributions uses A = P(1 + r/n)nt, where P is the starting principal, r is the annual interest rate, n is how many times interest compounds per year, and t is the number of years.

When you add regular contributions, each deposit is compounded from the date it is made using the future value of a series, then summed with the compounded principal. Compounding more often (daily rather than annually) raises the final balance slightly for the same annual rate.

Sources and references

This tool provides estimates for general information only, not professional advice. See our Disclaimer. Last reviewed: July 2026.

Frequently Asked Questions

What is compound interest?▾
Compound interest is interest earned on interest. You earn interest on your principal, then on the accumulated interest. Over time, this creates exponential growth. $10,000 at 7% grows to $19,671 in 10 years without additional contributions.
How does compounding frequency affect growth?▾
More frequent compounding = more growth. Daily compounding earns slightly more than annual. At 7% APY for 10 years: $10,000 becomes $19,671 (annual) vs $20,122 (daily). The difference increases with time and rate.
What is the rule of 72?▾
The Rule of 72 estimates doubling time: divide 72 by the interest rate. At 7% interest, money doubles in ~10.3 years (72 ÷ 7). At 10%, it doubles in ~7.2 years. This quick calculation shows compound growth power.
Should I make monthly contributions?▾
Yes! Regular contributions dramatically accelerate growth. Adding $500/month to $10,000 principal at 7% yields $117,723 after 10 years vs just $19,671 without contributions. Consistency beats timing.
What return rate should I expect?▾
Stocks historically return 7-10% annually (before inflation). Bonds return 2-5%. High-yield savings offer 4-5%. Use conservative estimates (4-6%) for planning. Past performance doesn't guarantee future results.
How does inflation affect returns?▾
Inflation erodes purchasing power. If investments return 7% but inflation is 3%, real return is 4%. Adjust expectations accordingly. This calculator shows nominal returns; subtract inflation for real purchasing power.
What is the difference between APR and APY?▾
APR (Annual Percentage Rate) is the simple interest rate. APY (Annual Percentage Yield) includes compounding. 7% APR compounded daily = 7.25% APY. Banks advertise APY for savings, APR for loans.