Compound Interest Calculator

Compound interest is interest earned on your starting amount plus all the interest you've already earned. Each period, your interest earns interest too, so your balance grows faster the longer you leave it invested. This snowball effect is what makes long-term saving so powerful.

The more often interest is added, the more you earn, because your interest starts earning interest sooner. At 8% on $10,000 over 20 years, annual compounding gives about $46,610, while daily compounding gives about $49,530, roughly $2,900 more from frequency alone. This calculator lets you compare daily, monthly, quarterly, half-yearly, and annual compounding directly.

Yes. Set a recurring monthly or yearly deposit and the calculator adds it on top of your starting amount, then shows how much of the final balance is your own money versus interest earned. Regular deposits are usually what turn a modest start into a large balance over decades.

Compounding makes your balance look bigger every year, but inflation works against you at the same time. An 8% return with 3% inflation is really only about a 4.85% real return. Over 30 years, that gap is the difference between savings that double your buying power and savings that barely keep up. This calculator always shows what your balance is worth today, next to the headline figure.

The standard formula is A = P × (1 + r/n)^(n×t), where P is the starting amount, r is the annual interest rate as a decimal, n is how many times interest is added per year, and t is the number of years. For example, $10,000 at 8% compounded monthly for 20 years is 10,000 × (1 + 0.08/12)^240 ≈ $49,268. If you also make regular deposits, each deposit compounds from the month it is made, so the deposit stream is valued as an annuity on top of the lump sum. The key idea is that interest is calculated on the growing balance, not the original amount, which is why the curve steepens over time and why starting early matters more than starting big. This calculator applies exactly this formula and then also shows the result adjusted for inflation.

The Rule of 72 is a quick mental shortcut for compounding: divide 72 by the annual growth rate to estimate how many years it takes money to double. At an 8% return, 72 ÷ 8 ≈ 9 years per doubling, so 27 years gives roughly three doublings, $10,000 becomes about $80,000. The same rule works against you with inflation: at 3% inflation, divide 72 by the rate to see how quickly prices double and your cash halves in buying power. The rule is an approximation (it is most accurate between about 4% and 12%), but it is close enough to sanity-check any calculator result instantly. If a projection claims your money will double in 5 years, the implied return is about 72 ÷ 5 ≈ 14.4% a year, a useful test of whether an assumption is realistic.

Simple interest is calculated only on the original principal: $10,000 at 8% simple interest earns a flat $800 every year, $16,000 of interest over 20 years. Compound interest is calculated on the principal plus all previously earned interest, so the base keeps growing: the same $10,000 at 8% compounded annually reaches about $46,600 in 20 years, nearly $20,600 more than the simple-interest result. The gap widens with time and with compounding frequency, which is why long horizons reward compounding so heavily. Most savings accounts, bonds and investment returns compound, while some short-term loans quote simple interest. When comparing products, always check both the rate and how often it compounds, a slightly lower rate compounded daily can beat a higher rate compounded annually over long periods.