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 (6% = 0.06), 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.
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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.