Compound Interest Calculator: Grow Your Wealth Over Time
Compound interest is often called the eighth wonder of the world. Unlike simple interest, which only earns interest on the original principal, compound interest earns interest on both the principal and previously accumulated interest. This exponential growth effect means your money grows faster the longer it stays invested, making it a cornerstone of long-term wealth building.
Our compound interest calculator lets you input your initial principal amount, annual interest rate, investment duration in years, and compounding frequency. The compounding frequency determines how often interest is calculated and added to the principal. Common options include annually, semi-annually, quarterly, monthly, and daily. The more frequently interest compounds, the more you earn over time.
The formula used is A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the annual rate, n is compounding frequency per year, and t is time in years. This standard formula is used by banks, financial advisors, and investment platforms worldwide to project growth of savings accounts, certificates of deposit, and investment portfolios.
The year-by-year breakdown table shows exactly how your investment grows each year. You can see the balance at the end of each year and the interest earned during that year. This transparency helps you understand the power of compounding: early years show modest gains, but later years show dramatically larger interest amounts as the compounding effect accelerates. Whether you are planning retirement savings, an education fund, or a general investment strategy, understanding compound interest is essential for making informed financial decisions.
If you are saving for retirement, try our retirement calculator to project your total savings with inflation adjustments and the 4% rule. If you are comparing mortgage or loan options, use our mortgage calculator or loan calculator to see how interest works on the borrowing side.