Compound Interest Calculator
This free compound interest calculator shows how a lump-sum investment or savings deposit grows when the interest it earns is added back and starts earning interest too. Enter the starting amount, the annual rate, the number of years and how often interest compounds to see the final balance and how much of it is pure interest.
How to use the compound interest calculator
- Enter your initial investment or deposit.
- Enter the expected annual interest rate or return.
- Enter the number of years you will leave the money invested.
- Choose the compounding frequency: daily, monthly, quarterly, semi-annually or annually.
- Press Calculate Growth.
The compound interest formula
A = P × (1 + r ÷ n)n × t, where A is the final amount, P the initial amount, r the annual rate as a decimal, n the number of times interest is added per year and t the number of years. The interest earned is A − P.
Worked example
Investing $5,000 at 7% for 10 years with monthly compounding grows to $10,048.31, so the money roughly doubles and earns $5,048.31 in interest. With simple interest (no compounding) the same deposit would only reach $8,500, because simple interest is paid on the original $5,000 every year and never on the interest already earned.
Does the compounding frequency matter?
| Compounding | Balance after 10 years ($5,000 at 7%) |
|---|---|
| Annually | $9,835.76 |
| Quarterly | $10,007.99 |
| Monthly | $10,048.31 |
| Daily | $10,068.09 |
More frequent compounding helps, but the difference between monthly and daily is small. The rate and, above all, the time invested matter much more.
Time is the most powerful factor
| Years invested | $10,000 at 7% compounded annually |
|---|---|
| 10 years | $19,671.51 |
| 20 years | $38,696.84 |
| 30 years | $76,122.55 |
The balance roughly doubles every 10 years at 7%. That is why starting early has such a large effect: the last decade of a 30-year investment adds more than the first two decades combined.
The rule of 72
A quick mental shortcut: divide 72 by the annual rate to estimate how many years it takes to double your money. At 7% it takes about 72 ÷ 7 ≈ 10.3 years; at 4% about 18 years; at 10% about 7.2 years. The same rule shows how fast debt doubles: credit card debt at 24% doubles in about 3 years if nothing is paid.
Things to keep in mind
- Investment returns are not guaranteed. Stock market returns vary from year to year; use a conservative rate for planning.
- Inflation reduces what the final amount can buy. Subtracting expected inflation from the rate gives a “real” growth estimate.
- Taxes and fees reduce the effective rate. A 1% yearly fee can take a large share of long-term growth.
- Compound interest works against you on debt. Paying off high-interest debt is often the best “investment” available.
Frequently asked questions about compound interest
What is the difference between simple and compound interest?
Simple interest is calculated only on the original amount. Compound interest is calculated on the original amount plus the interest already earned, so the balance grows faster each year.
Which compounding frequency should I choose?
Use the one your bank or investment states. Savings accounts usually compound daily or monthly; many bonds compound semi-annually.
Does this calculator include monthly contributions?
No, it models a single lump sum. For regular contributions use the retirement savings calculator.
What interest rate should I use for investments?
For long-term planning many people use 5% to 7% for a diversified stock portfolio, but past returns do not guarantee future results.
Can I use it for debt?
Yes. Enter the debt as the initial amount and its interest rate to see how much it would grow if left unpaid.
Related tools
- Retirement Savings Calculator – compound growth with monthly contributions.
- Loan Repayment Calculator – the cost of borrowing.
- Guide: how compound interest works
- All free tools
Further reading: Compound interest on Wikipedia. Results are estimates and not financial advice.