Compound Interest Calculator
See how your money grows with compound interest over time with daily, monthly, or annual compounding.
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How to Use This Calculator
- Enter your initial principal amount (starting investment)
- Input the annual interest rate as a percentage
- Specify the time period in years
- Select the compounding frequency (how often interest is calculated)
- Click 'Calculate' to see your future value and total interest earned
- The result shows your final amount, interest earned, and principal invested
Formula
A = P(1 + r/n)^(nt), where A = final amount, P = principal, r = annual interest rate (decimal), n = compounding frequency per year, t = time in years
Frequently Asked Questions
What is compound interest?▼
Compound interest is the interest calculated on the initial principal and also on the accumulated interest from previous periods. It's essentially 'interest on interest' and makes a sum grow faster than simple interest.
How is compound interest different from simple interest?▼
Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus any interest already earned. This means compound interest grows exponentially over time.
What does compounding frequency mean?▼
Compounding frequency refers to how often interest is calculated and added to the principal. Common frequencies are annually (1), semi-annually (2), quarterly (4), monthly (12), or daily (365). More frequent compounding results in higher returns.
What is a good interest rate for investments?▼
A good rate varies by investment type. Savings accounts typically offer 0.5-2%, while stock market historical average is around 7-10% annually. Higher returns usually come with higher risk.