Calculate compound interest on your investment with initial capital, recurring contributions, and your chosen compounding frequency.
Tap rows on mobile to view individual compounding steps
| Year | Deposits Made | Interest Accrued | Accrued Balance |
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Compound interest is mathematically calculated using standardized formulas that account for initial principal, compounding frequency, and regular additions.
Used to calculate growth on a lump-sum investment without any ongoing contributions.
A = P (1 + r / n)n * t
Used when regular, recurring deposits (monthly or yearly) are made to the account.
A = P(1 + r/n)nt + PMT [ ((1 + r/n)nt - 1) / (r/n) ]
Compound interest generates returns on both base principal and accumulated interest over previous periods, creating a snowball effect over time.
An online utility that computes future asset balances based on initial principal, recurring deposits, rate, and compounding schedules.
Calculated for $10,000 principal + $200/mo additions over 10 years at 8% p.a.:
Input starting principal and optional monthly deposits.
Select interest percentage and compounding schedule.
Review total interest gains and interactive trajectory charts.
Unlike Simple Interest—where returns are calculated strictly on your base principal—Compound Interest calculates returns on both your initial capital and accrued interest from previous periods. This reinvestment creates a snowball effect that accelerates asset growth over time.
The classic compound interest formula is A = P(1 + r/n)^(nt), where A is the future balance, P is initial principal, r is nominal annual rate, n is compounding frequency per year, and t is tenure in years. When making regular monthly contributions (PMT), future value incorporates an annuity compounding series.
Compounding can occur daily, monthly, quarterly, semi-annually, or annually. Higher compounding frequencies yield higher Annual Percentage Yield (APY) because interest earned is added back into your active principal earlier to start compounding sooner.
The Rule of 72 is a quick mathematical heuristic to estimate how long it takes for an investment to double at a given annual return rate. Simply divide 72 by your annual interest rate (e.g., 72 / 8% = 9 years to double your capital).
Time is the most dominant variable in compounding exponential curves. Starting to invest 10 years earlier—even with smaller monthly deposits—often yields a larger final net worth than investing double the amount later in life.
To evaluate true financial progress, nominal investment returns must be adjusted for price inflation. Real Rate of Return (Fisher Equation) measures your actual growth in purchasing power after accounting for inflation rates.
Quick answers about how this tool works.
Simple interest is calculated only on the original principal, while compound interest is calculated on both the principal and previously earned interest. As a result, compound interest generates exponential growth over time.
Compounding frequency refers to how often interest is added to the principal balance. Common frequencies include annually, semi-annually, quarterly, monthly, and daily. More frequent compounding generally results in higher returns.
The longer your money remains invested, the more time compound interest has to work. Starting early allows interest to generate additional interest for many years, significantly increasing the final investment value.
Yes. Making regular deposits or investments adds more principal to the account, allowing future interest to be calculated on a larger balance. Consistent contributions can dramatically increase long-term wealth accumulation.
Plain-language explainers that sit next to this tool.
Compound interest is the single most powerful force in personal finance. Understand the formula, see how small differences in rate and time create massive differences in outcome, and learn how to use it to your advantage.
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