Compound Interest Calculator
See how your investments grow with compound interest and regular contributions.
Year-by-year breakdown
| Year | Start | Contributions | Interest | End |
|---|---|---|---|---|
| 1 | $1,000.00 | $1,200.00 | $111.55 | $2,311.55 |
| 2 | $2,311.55 | $1,200.00 | $206.36 | $3,717.91 |
| 3 | $3,717.91 | $1,200.00 | $308.03 | $5,225.94 |
| 4 | $5,225.94 | $1,200.00 | $417.04 | $6,842.98 |
| 5 | $6,842.98 | $1,200.00 | $533.94 | $8,576.92 |
| 6 | $8,576.92 | $1,200.00 | $659.28 | $10,436.20 |
| 7 | $10,436.20 | $1,200.00 | $793.69 | $12,429.89 |
| 8 | $12,429.89 | $1,200.00 | $937.82 | $14,567.71 |
| 9 | $14,567.71 | $1,200.00 | $1,092.36 | $16,860.07 |
| 10 | $16,860.07 | $1,200.00 | $1,258.07 | $19,318.14 |
How compound interest works
Compound interest means earning interest on interest. Over time, this creates exponential growth. The earlier you start, the more powerful the effect.
The formula
A = P(1 + r/n)^(nt)
- P = principal (initial amount)
- r = annual interest rate (decimal)
- n = compounding periods per year
- t = time in years
Rule of 72
Quick estimate: divide 72 by the annual interest rate to get the years needed to double your money. At 7% interest, money doubles in about 10 years.
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Frequently Asked Questions
What is compound interest?
Compound interest is interest earned on both the initial principal and the accumulated interest from previous periods. It's why investments grow exponentially over time.
What's the difference between compound and simple interest?
Simple interest is only on the principal. Compound interest is on principal + previous interest, so it grows faster.
What compounding frequency should I use?
Use the frequency your account actually uses: monthly (12) for most savings, daily (365) for some accounts, annually (1) for bonds.
How do monthly contributions affect the result?
They add to the balance every month and compound along with it. This is how retirement accounts (401k, IRA) grow.
Is the result guaranteed?
No. The calculator assumes a constant interest rate, which rarely happens in real markets. Use it as an estimate.