Compound Interest Calculator
Calculate how your investments grow over time with compound interest and regular contributions.
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About Compound Interest
Compound Interest: Interest calculated on the initial principal and accumulated interest from previous periods.
Compounding Frequency: How often interest is calculated and added to your balance. More frequent compounding (monthly vs. annually) results in higher returns.
Formula: FV = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) - 1) / (r/n)], where P is principal, r is annual rate, n is compounding frequency, t is time in years, and PMT is periodic contribution.
The Exponential Impact of Time
The most critical variable in compound interest is not the interest rate, but the duration of the investment. Because interest earns its own interest, the growth curve becomes exponential rather than linear over long periods. Starting an investment five years earlier can often result in a higher final balance than contributing significantly more money starting five years later.
Compounding frequency also plays a subtle but powerful role. An investment that compounds monthly will grow faster than one that compounds annually, even at the same nominal interest rate. This is why high-yield savings accounts and dividend-reinvesting stocks are powerful tools for wealth accumulation—they accelerate the cycle of earning returns on your returns.