Compound Interest Calculator
Discover the power of compounding by calculating how your principal and recurring monthly deposits grow over time.
Calculator Inputs
LiveHow to use the Compound Interest Calculator
- 1Enter your starting investment principal.
- 2Enter the expected annual interest or return rate.
- 3Select investment timeframe in years.
- 4Optionally add recurring monthly deposits.
- 5Examine future accumulated wealth and total interest earned.
How Compound Interest is Calculated
Compound interest generates interest not only on the initial principal but also on accumulated interest from prior compounding periods.
A is final balance, P is initial principal, r is annual interest rate, n is compounding frequency per year, t is time in years, and PMT is periodic deposit.
- 1A = 10,000 × (1 + 0.08 / 12)¹⁸⁰
- 2A = 10,000 × 3.3069 = $33,069.21
- 3Total Interest = $33,069.21 - $10,000 = $23,069.21
What affects Compound Interest results
- Compounding frequency (daily, monthly, quarterly, annually).
- Length of investment horizon (time is the strongest multiplier).
- Consistency and magnitude of ongoing contributions.
Frequently Asked Questions
What is the Rule of 72?
The Rule of 72 is a quick mental math shortcut: divide 72 by your annual interest rate to estimate how many years it will take for your money to double (e.g. at 8%, 72 / 8 = 9 years).
Why is compound interest superior to simple interest?
Simple interest only pays on the original base, producing linear growth, while compound interest creates exponential growth as earnings generate their own returns.
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