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Compound Interest Calculator

Calculate how your money grows over time with the compounding interest formula.

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Detailed Guide

How Compound Interest Works

Understand how compounding frequencies, rates, and periodic deposits grow your capital over time.

Read full educational guide
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How to Calculate & Use the Compound Interest Calculator

Watch your investments grow over time with our free compound interest calculator. Compound interest is the secret to building long-term wealth, earning you interest on your principal and on your accumulated earnings. Input your starting deposit, monthly contribution, annual rate, and investment period to see a detailed visual chart of your future financial growth.

Input & Variable Breakdown:

  • Initial Deposit: Currency amount to be factored.
  • Monthly Contribution: Currency amount to be factored.
  • Annual Interest Rate: Relational multiplier percentage value.
  • Investment Period (Years): Bounded variable used in the formulas.
  • Compounding: Bounded variable used in the formulas.

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Frequently Asked Questions

What is the formula for compound interest?

The formula for compound interest, including regular contributions, is: A = P(1 + r/n)^(nt) + PMT * [((1 + r/n)^(nt) - 1) / (r/n)], where A is future value, P is principal, r is rate, n is compounding frequency, t is years, and PMT is monthly contribution.

What is the difference between simple interest and compound interest?

Simple interest is calculated only on the initial principal amount. Compound interest is calculated on the principal plus all accumulated interest from previous periods, leading to exponential growth over time.

How does compounding frequency impact returns?

Compounding frequency determines how often interest is calculated. Compounding daily yields slightly higher returns than compounding monthly, quarterly, or annually, because interest is added to the balance more frequently, creating a larger base for subsequent interest calculations.