Compound Interest Calculator
Calculate compound interest with daily, monthly, quarterly, or annual compounding. Includes year-by-year growth table. Free online investment calculator.
Formula
A = P · (1 + r/n)^(n·t) + M · ((1 + r/n)^(n·t) − 1) ÷ (r/n)
P = principal, r = annual rate (decimal), n = compounds per year, t = years. M = annual contribution ÷ n per period (0 if unused). More frequent compounding yields a higher final amount.
Compound interest is the process of earning interest on both your original principal and the interest already accumulated. Often called "the eighth wonder of the world," it's the fundamental mechanism that makes long-term investing so powerful. This calculator shows your final balance, total interest earned, and a year-by-year growth table.
The compound interest formula
For a lump sum: A = P × (1 + r/n)^(n×t), where P = principal, r = annual rate (decimal), n = compounding periods per year, t = years.
For example: $10,000 invested at 7% compounded monthly for 20 years: A = 10,000 × (1 + 0.07/12)^(12×20) = $40,102. The original $10,000 grew to over $40,000 with $30,102 in interest — that's the power of compound growth over time.
Compounding frequency matters
The more frequently interest compounds, the faster your money grows. Daily compounding gives slightly more than monthly, which gives more than quarterly, which gives more than annual — though the differences are smaller than people expect. What matters far more is the interest rate and the time horizon. A 1% higher annual return compounded over 30 years has a far larger impact than switching from monthly to daily compounding.
The Rule of 72
A handy shortcut: divide 72 by your annual interest rate to estimate how many years it takes to double your money. At 6% interest: 72 ÷ 6 = 12 years to double. At 9%: 72 ÷ 9 = 8 years. At 4%: 72 ÷ 4 = 18 years. This rule works well for rates between 2% and 15%.
Monthly contributions
Adding regular monthly contributions dramatically accelerates wealth building. Contributing even $200/month alongside a $10,000 lump sum at 7% for 20 years grows to over $150,000 — compared to $40,000 with just the lump sum. Starting early and contributing consistently is more important than the exact amount you start with.
Frequently Asked Questions
How does compounding frequency affect my returns?
More frequent compounding means slightly higher returns. Daily compounding earns a bit more than monthly, which earns more than annual — but the difference shrinks as frequency increases beyond monthly.
What is the Rule of 72?
Divide 72 by your annual interest rate to estimate how many years it takes to double your money. For example, at 6% annual interest, your money doubles in roughly 72 ÷ 6 = 12 years.
Understanding Compound Interest