See how your money grows with compound interest. Enter the principal, yearly interest rate, years and compounding frequency to see your final amount and total interest earned.
1. Enter the principal amount and the yearly interest rate. 2. Enter the number of years and how often interest is compounded. 3. Click Calculate Growth.
Compound interest is interest earned on interest. In the first year you earn interest on your original money, and in the second year you earn interest on your original money plus the interest from the first year. Over many years this snowball effect makes your money grow much faster than simple interest, which pays interest only on the original amount. This free compound interest calculator shows how savings, fixed deposits and investments grow over time, and why starting early matters so much.
Albert Einstein is often quoted as calling compound interest the eighth wonder of the world, because small, regular savings can grow into large sums over decades. A person who saves the same amount every month from age 25 will usually end up with far more than a person who starts at 40, even if the second person saves more each month. That is the power of time plus compounding, and this calculator lets you see it with your own numbers.
Invest 100,000 at 8 percent per year for 5 years, compounded yearly. The final amount is 100,000 times 1.08 to the power of 5, which is about 146,933. You earned about 46,933 in interest. With monthly compounding, the same money grows to about 148,985, because interest is added twelve times a year instead of once. Compare that with simple interest, which would give only 100,000 plus 40,000, or 140,000. The extra 6,933 to 8,985 is the reward for compounding.
The formula is: A = P times (1 + r divided by n) to the power of (n times t). Here A is the final amount, P is the principal, r is the yearly interest rate as a decimal (8 percent is 0.08), n is how many times interest is compounded each year, and t is the number of years. Compounding yearly means n is 1, half-yearly means 2, quarterly means 4, and monthly means 12. The more often interest compounds, the slightly higher the final amount.
Start as early as you can. Time matters more than the amount: money invested for 30 years grows far more than the same money invested for 10 years. Reinvest the interest. Compounding only works if you leave the interest in the account instead of spending it. Compare compounding frequencies. Monthly compounding beats yearly compounding, but only by a small amount, so do not pay high fees for it. Remember inflation. If prices rise by 5 percent a year and your money earns 8 percent, your real growth is about 3 percent. Be patient. Growth looks slow in the first few years and speeds up later, so give your savings time to work.
Invest 50,000 at 9 percent per year for 10 years, compounded once a year. The amount becomes 50,000 times 1.09 to the power of 10, which is about 118,368, so the interest is about 68,368. Now compound the same investment monthly instead: the amount becomes about 122,568, which is about 4,200 more, just because the interest is added twelve times a year instead of once. The difference is small at first, but over 20 or 30 years monthly compounding pulls clearly ahead. Try both frequencies in the calculator above.
Confusing simple and compound interest. Simple interest pays interest only on the original amount, while compound interest pays interest on the interest too, so the results are very different over many years. Forgetting the compounding frequency. Monthly compounding gives more than yearly compounding at the same rate. Assuming the rate never changes. Real investments change their return every year, so this calculator shows what happens if the rate stays the same. Ignoring tax. Interest is often taxed, so the money you keep is less than the calculator shows. Stopping too early. Compound growth is slow in the first years and fast later, so taking the money out early loses most of the benefit.
Pro Tip: Add a little money every year on top of your starting amount. Regular top-ups plus compounding grow your savings much faster than compounding alone.
Note: This calculator assumes the interest rate stays the same for the whole period and no money is added or taken out. Real investments vary, so treat the result as an estimate.
What is compound interest? Compound interest is interest earned on both your original money and the interest already earned. It makes savings grow faster than simple interest, which pays interest only on the original amount.
What is the difference between simple and compound interest? Simple interest on 100,000 at 8 percent for 5 years is 40,000. Compound interest on the same money is about 46,933, because each year you earn interest on a bigger total.
Does compounding frequency matter? Yes, but only a little. Monthly compounding gives a slightly higher final amount than yearly compounding, because interest is added more often. The rate and the time matter far more.
How can I double my money? The Rule of 72 gives a quick estimate: divide 72 by the yearly interest rate. At 8 percent, money doubles in about 9 years. At 6 percent, it takes about 12 years.
Is the result guaranteed? No. The calculator shows what happens if the rate stays the same for the whole period. Real savings rates and investment returns change over time.
What is a good interest rate for savings? It depends on your country and the year. Compare bank fixed deposit rates, check whether the rate is fixed or variable, and remember that higher returns usually come with higher risk.
Does compounding more often make a big difference? Over a short time the difference is small, but over 10 or 20 years monthly compounding gives clearly more than yearly compounding at the same rate.