Compound Interest Calculator
Calculate how your investments can grow over time with compound interest
Input Parameters
How Compound Interest Works
Compound interest is calculated on the initial principal and also on the accumulated interest from previous periods. The more frequently interest is compounded, the greater your returns.
Investment Results
Compound Interest Guide
Understand how your money can grow exponentially through the power of compounding
Understanding Compound Interest
A Compound Interest Calculator is a powerful financial tool designed to help you calculate the future value of an investment or savings account based on the principle of compound interest. Compound interest is earned not only on the initial principal but also on the accumulated interest over time.
This tool simplifies complex calculations, allowing you to visualize how your money can grow over months, years, or decades. Whether planning for retirement, saving for a big purchase, or exploring investment opportunities, a Compound Interest Calculator provides clear insights into how your money can work for you.
By understanding and leveraging compound interest, you can make informed decisions that significantly impact your long-term financial health and help you achieve your financial goals more efficiently.
Principal Investment
The initial amount of money you invest or deposit. This is the starting point for your investment growth and forms the basis on which compound interest is calculated.
Example: $10,000 initial investment at 5% annual interest will grow to $16,288.95 in 10 years with monthly compounding.
Annual Interest Rate
The yearly interest rate applied to your investment. This percentage determines how quickly your money grows. Higher rates accelerate growth through compounding.
Tip: Even a 1% difference can significantly impact long-term results due to the exponential nature of compounding.
Investment Period
The length of time your money remains invested. Compound interest works best over longer periods, as growth accelerates exponentially with time.
Key Insight: Starting early allows you to maximize the power of compounding, often yielding better results than investing larger amounts later.
Compounding Frequency
How often interest is calculated and added to your principal. Common frequencies include annually, semi-annually, quarterly, monthly, or daily.
Important: More frequent compounding results in higher returns. Monthly compounding typically yields better results than annual compounding.
Regular Contributions
Additional money you regularly add to your investment. Consistent contributions dramatically increase your final balance through combined compound growth.
Strategy: Even small, regular contributions can lead to significant wealth accumulation when combined with compound interest.
Future Value Calculation
The projected value of your investment at the end of the investment period. This calculation considers all factors: principal, interest rate, time, compounding frequency, and contributions.
Formula: FV = P(1 + r/n)^(nt) + C[((1 + r/n)^(nt) - 1)/(r/n)]