Compound Interest Calculator
Compound interest is the most powerful force in personal finance. This calculator shows you exactly how much your money will grow based on your initial investment, annual interest rate, compounding frequency, and time horizon. See the exponential growth year by year and understand why starting early makes such a dramatic difference.
Total accumulated
Capital
Interest earned
Year-over-year growth
Estimated result. Consult a professional for financial decisions.
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How it works
The formula is A = P × (1 + r/n)^(n×t), where P is the initial principal, r is the annual rate as a decimal (8% = 0.08), n is the number of compounding periods per year, and t is the time in years. Monthly compounding (n=12) is the most common in savings accounts and fixed deposits. To picture the snowball effect, imagine $10,000 invested at 8% annually. The first year it earns $800 and reaches $10,800. The second year the 8% is charged on $10,800, not on the original $10,000, so it earns $864 — $64 more than the year before without you adding a single dollar. By year 10 the balance has grown to $21,589.25: your money has more than doubled, and the interest earned in that final year alone ($1,599.20) is nearly double the first year’s $800. That acceleration is the entire point of compounding — every year’s interest joins the capital and starts earning interest of its own.
The snowball effect, year by year
This table follows the same $10,000 at 8% annual compounding for ten years. Watch the third column: the interest earned climbs every single year even though the rate never changes, because it is always calculated on a larger balance. A quick way to estimate how long money takes to double is the rule of 72 — divide 72 by the interest rate and you get the approximate number of years. At 8%, 72 ÷ 8 = 9 years, which matches the table almost exactly, since the balance crosses $20,000 just after year 9. This site has a dedicated rule of 72 calculator if you want to explore that shortcut on its own.
| Year | Balance at 8% | Interest that year |
|---|---|---|
| 0 | 10,000.00 | — |
| 1 | 10,800.00 | 800.00 |
| 2 | 11,664.00 | 864.00 |
| 3 | 12,597.12 | 933.12 |
| 4 | 13,604.89 | 1,007.77 |
| 5 | 14,693.28 | 1,088.39 |
| 6 | 15,868.74 | 1,175.46 |
| 7 | 17,138.24 | 1,269.50 |
| 8 | 18,509.30 | 1,371.06 |
| 9 | 19,990.05 | 1,480.75 |
| 10 | 21,589.25 | 1,599.20 |
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Preguntas frecuentes
- What is compound interest?
- Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest — which only calculates interest on the original amount — compound interest produces exponential growth over time.
- What is the compound interest formula?
- A = P × (1 + r/n)^(n×t), where A is the final amount, P is the initial principal, r is the annual rate as a decimal (6% = 0.06), n is the number of compounding periods per year (12 for monthly), and t is the time in years.
- What is the difference between monthly and annual compounding?
- With monthly compounding, interest is calculated and added each month, generating more returns than annual compounding. For $10,000 at 6% annual over 10 years: annual compounding gives $17,908, monthly compounding gives $18,194.
- Which compounding frequency is best?
- The more frequent the compounding, the higher the final amount. Daily compounding produces the highest result, though the difference from monthly is small at moderate rates. Savings accounts and fixed deposits typically use monthly or quarterly compounding.
- Is this calculator exact?
- It uses the exact mathematical formula. However, it is an estimate: it does not account for fees, taxes, or rate changes. Consult a financial advisor before making investment decisions.
- How long will it take my money to double?
- Use the rule of 72: divide 72 by the annual interest rate and you get the approximate number of years to double. At 8% that is 72 ÷ 8 = 9 years; at 6%, 12 years; at 4%, 18 years. It is an approximation, but it is remarkably accurate for the rates found in everyday savings and investments.
- Does this calculator include monthly contributions?
- No. It models a single initial deposit that grows on its own, which is the pure definition of compound interest. If you add money every month, the final balance will be considerably higher, because each contribution also starts compounding. For that scenario you would need a calculator with periodic contributions.