Free compound interest calculator to calculate growth of your investments, savings, and retirement accounts over time.
Visualize the power of compound interest with detailed charts showing principal vs interest growth and year-by-year breakdown.
Plan your financial future with accurate calculations for savings accounts, investments, and retirement planning.
Enter your initial principal amount (starting investment or savings)
Input the annual interest rate as a percentage
Select the compounding frequency (daily, monthly, quarterly, annually)
Enter the investment period in years
Optional: Add regular monthly contributions for systematic investing
Optional: Include annual contribution increases for raises or inflation
Click 'Calculate' to see total value, interest earned, and growth charts
Review year-by-year breakdown and compound interest effects
$10,000 initial investment + $500 monthly at 8% annual return for 30 years
$5,000 initial deposit + $200 monthly at 4.5% APY for 10 years
$2,000 initial + $300 monthly at 7% return for 18 years
$1,000 initial + $150 monthly at 5% return for 5 years
$25,000 initial + $1,000 monthly at 12% return for 20 years
Calculate how much you need to save monthly to reach your retirement goals. See how starting early and compound interest can significantly increase your retirement corpus.
Plan for your children's college expenses by calculating how much to invest regularly to reach your education savings goals by the time they need the funds.
Determine how much to save monthly to accumulate enough for a home down payment, considering compound interest on high-yield savings accounts.
Compare different investment strategies and contribution amounts to find the optimal approach for building long-term wealth through compound growth.
Calculate how long it will take to build an emergency fund with regular contributions and compound interest, helping you achieve financial security.
Compound interest is the phenomenon where interest earned on an investment is reinvested and generates additional interest, creating exponential growth over time. Unlike simple interest, which is calculated only on the principal amount, compound interest is calculated on both the principal and the accumulated interest from previous periods. This 'interest on interest' effect is what Albert Einstein reportedly called the 'eighth wonder of the world'.
The frequency of compounding significantly affects investment growth. Daily compounding generates more interest than monthly or annual compounding because interest is calculated more frequently and added to the principal. While the difference may seem small initially, over long periods, more frequent compounding can substantially increase total returns. This is why many investment products advertise their APY (Annual Percentage Yield), which reflects the effect of compounding.
The power of compound interest is most evident over long time periods. Starting to invest early, even with smaller amounts, can result in larger final values than starting later with larger contributions, due to the extended time for compound growth to work its magic. This principle underlies the importance of early and consistent investing for long-term financial goals.
Starting too late in life
Start investing as early as possible, even with small amounts. Time is the most powerful factor in compound growth - starting just 5 years earlier can make a huge difference.
Not accounting for inflation
Use real return rates (nominal return minus inflation) for long-term planning. This gives you a more realistic picture of your future purchasing power.
Interrupting compound growth with withdrawals
Avoid withdrawing from long-term investments unless necessary. Each withdrawal interrupts the compound growth and significantly reduces long-term returns.
Ignoring taxes in investment returns
Consider tax implications in your calculations. Use after-tax returns for taxable accounts, or maximize tax-advantaged accounts like 401(k)s and IRAs.
Being too conservative with return assumptions
While being realistic is important, overly conservative assumptions may lead to under-saving. Use appropriate return rates based on your investment allocation and time horizon.
Not increasing contributions over time
Increase your investment contributions as your income grows. Even small annual increases can significantly boost your final investment value.
Simple interest is calculated only on the principal amount, while compound interest is calculated on both principal and accumulated interest. Compound interest generates exponential growth, while simple interest generates linear growth.
More frequent compounding generates slightly higher returns. Daily compounding provides the most growth, followed by weekly, monthly, quarterly, and annually. However, the difference becomes less significant over longer periods.
Returns vary by investment type. High-yield savings: 3-5%, bonds: 4-7%, balanced portfolios: 7-10%, aggressive stock portfolios: 10-15% over long periods. Past performance doesn't guarantee future returns.
This depends on your retirement goals, timeline, and expected returns. A common guideline is 15% of your income, including employer matches. Use our calculator with your specific numbers to determine the right amount.
Yes, compound interest is a powerful wealth-building tool when combined with consistent investing and a long time horizon. Many millionaires built their wealth primarily through compound growth over decades.
The Rule of 72 is a quick way to estimate how long it takes for an investment to double: divide 72 by the annual interest rate. For example, at 8% interest, money doubles in approximately 9 years (72 ÷ 8 = 9).
Inflation reduces the real purchasing power of your returns. If your investment earns 8% but inflation is 3%, your real return is only 5%. Always consider inflation in long-term financial planning.
Both! Compound interest works for you in investments but against you in debt. Pay off high-interest debt first, then invest to harness compound growth for your benefit.