Compound Interest Calculator
Calculate how your money grows with compound interest. See the power of compounding with different frequencies and regular contributions over time.
Compound Interest Details
How to Use the Compound Interest Calculator
- Enter Principal Amount: Input your initial investment or starting balance
- Set Interest Rate: Enter the annual interest rate as a percentage
- Choose Time Period: Specify how many years you want to calculate growth
- Select Compounding Frequency: Choose how often interest is compounded (daily, monthly, quarterly, annually)
- Add Regular Deposits: Include periodic contributions to see enhanced growth
- Review Results: See your final balance, total interest earned, and growth breakdown
Compound Interest Examples
High-Frequency Compounding
With Regular Contributions
The Power of Compounding:
- Time is Your Friend: The longer you invest, the more powerful compounding becomes
- Frequency Matters: Daily compounding beats annual compounding, though the difference decreases with time
- Regular Contributions: Adding money regularly dramatically increases your final balance
- Start Early: Beginning 10 years earlier can result in significantly more wealth
Understanding Compound Interest
Key Concepts
Compound vs. Simple Interest
Compound interest earns interest on interest, while simple interest only earns on the principal
Compounding Frequency
How often interest is calculated and added to the balance (daily, monthly, quarterly, annually)
Rule of 72
Divide 72 by your interest rate to estimate how long it takes to double your money
Maximizing Growth
Start Early
Time is the most powerful factor in compound interest growth
Contribute Regularly
Regular additions provide more principal for compounding
Reinvest Returns
Don't withdraw interest - let it compound for maximum growth
Frequently Asked Questions
What's the difference between compound and simple interest?
Simple interest is calculated only on the principal amount, while compound interest is calculated on both the principal and previously earned interest, leading to exponential growth.
Does compounding frequency really matter?
Yes, but the impact diminishes with higher frequencies. Daily compounding typically provides only slightly better returns than monthly compounding for most practical purposes.
What's the Rule of 72?
Divide 72 by your interest rate to estimate doubling time. For example, at 6% interest, your money doubles in about 12 years (72 ÷ 6 = 12).
When should I start investing to benefit from compound interest?
As early as possible! Starting in your 20s versus 30s can result in hundreds of thousands more dollars by retirement due to the power of compound growth over time.
What investments offer compound interest?
Savings accounts, CDs, bonds, dividend-paying stocks, and mutual funds all can provide compound growth when returns are reinvested rather than withdrawn.
How accurate are these calculations?
These calculations assume consistent returns, which don't reflect real market volatility. Use results as estimates for planning purposes, understanding actual returns will vary.
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