Compound Interest Calculator
Calculate compound interest and the future value of an investment based on the principal, annual rate, time, and compounding frequency.
The initial amount of money.
Annual interest rate (e.g. 5 for 5%).
Enter as decimal for partial years (e.g. 1.5).
A = P(1 + r/n)nt
Learn More About Compound Interest Calculator
Why compound interest matters
Compound interest means your balance grows not only from the original principal, but also from interest that has already been added. Over long periods, that “interest on interest” effect can make a much bigger difference than many people expect.
This is why time is such a powerful factor in investing. Even a modest rate can produce large gains when the balance keeps compounding year after year.
Example compound growth
If you invest $10,000 at 6% annual interest for 20 years, the ending value is much higher with compounding than with simple interest alone. If the interest compounds monthly instead of yearly, the ending value becomes slightly higher again because the balance is updated more often.
Small differences in rate, contribution timing, and compounding frequency can add up over long timelines, which is why running multiple scenarios is worth the effort.
What this calculator assumes
This calculator assumes a steady rate and a predictable compounding schedule. Real investments can fluctuate, and taxes or account fees can reduce your actual returns.
Use the result as a planning estimate. It is especially helpful for comparing savings strategies, account growth, or long-term goals like retirement and education funding.
Frequently Asked Questions
What is the difference between simple interest and compound interest?
Simple interest is calculated on the original principal only. Compound interest is calculated on the principal plus any interest that has already been added — meaning you earn interest on your interest, which accelerates growth over time.
How does compounding frequency affect returns?
The more frequently interest is compounded, the higher your effective annual yield. For example, monthly compounding produces slightly more growth than annual compounding because interest begins earning its own interest sooner.
Can I use this for stocks, bonds, and savings accounts?
Yes. This calculator works for any investment or loan that uses compound interest — including high-yield savings accounts, CDs, bonds, and dividend reinvestment accounts. Just enter the annual rate and time horizon.
What is the effective annual rate (EAR)?
The effective annual rate is the actual return or cost of money when compounding is taken into account. It is always higher than the stated annual rate when compounding occurs more than once per year. For example, 5% compounded monthly has an EAR of about 5.12%.