Compound Interest Calculator
Growth over time with configurable compounding frequency and optional regular contributions.
Compound Interest Calculator
Final Amount
13,535
Total Interest Earned
8,535
Total Invested
5,000
Compound growth with regular contributions
Two components: the lump sum compounds, and each contribution compounds for the time remaining after it is made.
A = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) − 1) ÷ (r/n)]
- A
- Final amount
- P
- Initial principal
- r
- Annual rate as a decimal (5% = 0.05)
- n
- Compounding periods per year
- t
- Years
- PMT
- Contribution per compounding period
Worked example
- Initial
- 10,000
- Monthly contribution
- 500
- Rate
- 7% annually, compounded monthly
- Term
- 20 years
- Total contributed
- 10,000 + 120,000 = 130,000
≈ 300,000 — of which roughly 170,000 is growth
Growth exceeds contributions after around year 13 in this example. That crossover point is the whole argument for starting early: it is determined by time far more than by the amount contributed.
Does compounding frequency matter?
Less than people expect. 10,000 at 5% for one year:
| Frequency | Periods | Final amount | Effective annual rate |
|---|---|---|---|
| Annually | 1 | 10,500.00 | 5.000% |
| Semi-annually | 2 | 10,506.25 | 5.063% |
| Quarterly | 4 | 10,509.45 | 5.095% |
| Monthly | 12 | 10,511.62 | 5.116% |
| Daily | 365 | 10,512.67 | 5.127% |
| Continuously | ∞ | 10,512.71 | 5.127% |
The gap between annual and continuous compounding is 12.71 on 10,000 — about 0.13%. Frequency is worth understanding and almost never worth optimising for. Compare the effective annual rate (APY/AER), which folds frequency in and makes offers directly comparable.
About
The Compound Interest Calculator applies the formula A = P(1 + r/n)^(nt) to show how an investment grows over time. Choose from daily, monthly, quarterly, semi-annual, or annual compounding. The results include the final amount, total interest earned, and a year-by-year growth table so you can see the power of compounding in action.
How to use
- 1 Enter your starting principal (initial deposit or investment).
- 2 Enter the annual interest rate or APY.
- 3 Set the investment period in years.
- 4 Choose a compounding frequency (daily compounds fastest).
- 5 The final balance, interest earned, and growth table appear instantly.
- What is compound interest and how is it different from simple interest?
- Compound interest calculates interest on both the original principal and the accumulated interest from previous periods — interest earns interest. Simple interest only calculates on the original principal. For example, $1,000 at 10% for 3 years: simple interest gives $300; compound interest (annual) gives $331 — a $31 difference that grows dramatically over longer periods.
- How does compounding frequency affect the final amount?
- More frequent compounding produces a higher final amount because interest is added to the principal more often, so each subsequent calculation has a larger base. Daily compounding gives the highest result, followed by monthly, quarterly, semi-annual, and annual. The difference is significant over long periods — on $10,000 at 8% over 30 years, daily compounding yields about $1,000 more than annual compounding.
- What is the Rule of 72?
- The Rule of 72 is a quick mental formula for estimating how long it takes an investment to double at a given interest rate: divide 72 by the annual interest rate. For example, at 8% annual return, 72 ÷ 8 = 9 years to double. At 6%, it takes 12 years. It is a useful approximation for annual compounding — verify with this calculator for exact values.
The full guide
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