Compound Interest Calculator – Grow Your Savings
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What Is Compound Interest?
Compound interest is interest calculated on both your initial investment and on the interest it has already earned. Over time, this creates exponential growth — your money earns returns, and then those returns start earning returns of their own.
Formula Used
A = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) − 1) / (r/n)]
Where A is the future value, P is the initial principal, r is the annual interest rate, n is the compounding frequency per year, t is the number of years, and PMT is the regular monthly contribution.
How to Use This Calculator
Enter your initial investment, any monthly contribution you plan to add, the expected annual interest rate, the investment period in years, and how often interest compounds. Click "Calculate" to see your projected future value, total contributions, and interest earned.
Why Compounding Frequency Matters
More frequent compounding (daily vs. annually) results in slightly higher returns for the same nominal interest rate, because interest gets added to your balance more often and starts earning its own interest sooner. The difference is usually small but grows over long time periods.
Frequently Asked Questions
What's the difference between compound interest and simple interest?
Simple interest is calculated only on the original principal. Compound interest is calculated on the principal plus all previously earned interest, so it grows faster over time. Use our Interest Calculator to compare simple interest specifically.
Does monthly contribution amount matter more than the interest rate?
Both matter, but consistent contributions over a long period often have a bigger impact than chasing a slightly higher rate, especially early in the investment period.
How accurate is this for real investments?
This calculator assumes a constant, fixed rate of return, which real markets don't provide. It's best used to understand growth potential, not as a guaranteed projection.
What interest rate should I use for a realistic estimate?
For long-term stock market investments, many analysts use historical averages around 7-10% annually, though actual returns vary year to year.