Compound Interest Calculator

Compound interest is the interest you earn not only on the initial principal but also on the accumulated interest over previous periods. In simpler terms, it’s “interest on interest,” allowing your investment to grow faster over time compared to simple interest.

Our Compound Interest Calculator factors in your starting principal, additional contributions, interest rate, and how often the interest is compounded. It then applies the compound interest formula over your specified time span, giving you a projected ending balance.

Regular contributions—monthly, quarterly, or annually—can significantly increase your total returns. Each contribution benefits from the same compound interest effect, leading to exponential growth over time. Even small, consistent deposits can make a huge difference.

• Annually: Interest is added once per year.
• Quarterly: 4 times a year (every 3 months).
• Monthly: 12 times a year.
• Daily: 365 times a year (or 366 in leap years).

A higher frequency (like monthly or daily) does yield a slightly bigger return than annual compounding, but the difference can be small unless the interest rate is quite high. It’s usually best to focus on the overall rate and how often you contribute more funds.

The calculation is mathematically correct based on the inputs you provide. However, real-world investments may have varying returns, changing interest rates, or additional fees. Treat this tool as a guideline for growth potential rather than a guaranteed prediction.

Absolutely! Many people rely on compound interest to grow their retirement nest egg or save for future education expenses. By adjusting your monthly contributions and time horizon, you can gauge if you’re on track to meet your goals—then make informed adjustments to reach them faster.

The formula for compound interest is:

A = P(1 + r/n)^(nt)

• A = Final amount
• P = Principal (initial investment)
• r = Annual interest rate (decimal form)
• n = Number of times interest compounds per year
• t = Time in years

This formula helps calculate how much your investment will grow over time.

Inflation reduces the purchasing power of money over time, meaning your investment returns must outpace inflation for real growth.

📌 Example:

• Investment Growth Rate: 6% per year
• Inflation Rate: 3% per year
• Real Return: 6% - 3% = 3% growth

Always consider inflation-adjusted returns when planning long-term investments.

Simple interest is calculated only on the initial principal, while compound interest earns "interest on interest," allowing investments to grow faster.

🔹 Comparison Table:

Compound interest is better for long-term growth, while simple interest is commonly used in short-term loans.

Investments that compound earnings over time provide the best growth. Common options include:

• Stock Market - Dividend reinvestments boost growth.
• High-Interest Savings Accounts - Earns interest regularly.
• Retirement Accounts (401k, IRA) - Tax advantages enhance compounding.
• Mutual Funds & ETFs - Diversified investments with compounding benefits.

The longer your investment timeframe, the more powerful compound interest becomes.

To maximize compound interest, focus on these key strategies:

📌 Tips to Boost Compound Growth:

• Start investing as early as possible.
• Choose investments with higher annual interest rates.
• Increase contributions regularly (monthly/annually).
• Select compounding frequencies that maximize growth (e.g., daily over annually).
• Reinvest dividends and earnings to accelerate compounding.

Following these steps helps you build wealth efficiently over time.