📈 Compound Interest Calculator
See how your savings or investment grows over time
Calculate Your Growth
Compound Interest Guide
How Compound Interest Works
Compound interest means you earn interest not just on your original amount (principal), but also on the interest that's already accumulated. The formula is A = P(1 + r/n)^(nt), where P is principal, r is the annual rate, n is how many times per year interest compounds, and t is time in years. More frequent compounding (daily vs. annually) produces slightly more growth for the same stated rate.
Why Regular Contributions Matter
Adding a fixed monthly contribution dramatically increases long-term growth, because each new contribution also starts earning its own compound interest from the moment it's added. This is why starting to save early — even small amounts — tends to outperform saving larger amounts later.
| Compounding Frequency | Periods Per Year |
|---|---|
| Annually | 1 |
| Quarterly | 4 |
| Monthly | 12 |
| Daily | 365 |
Frequently Asked Questions
Does compounding frequency really make a big difference?
The difference between monthly and daily compounding is usually small (a fraction of a percent over many years), but the difference between annual and monthly compounding can be noticeable over long time horizons, especially at higher interest rates.
What's the difference between this and a savings account APY?
APY (Annual Percentage Yield) already accounts for compounding frequency, so if you have an APY figure, you can use it directly as the annual rate with annual compounding for a close estimate.
Is this the same math used for investment growth, like index funds?
The formula is the same, but real investment returns fluctuate year to year rather than compounding at a fixed guaranteed rate. This calculator is useful for modeling a steady average annual return, not for predicting actual market performance.
Does this account for taxes or inflation?
No — this shows nominal growth only. Taxes on interest/gains (depending on account type) and inflation would both reduce the real purchasing power of the future value shown here.