Compound Interest Calculator
🏠 Free ToolCalculate how your investments grow over time with compound interest. Enter your initial amount, monthly contributions, interest rate, and compounding frequency to see your projected wealth.
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Open a free investment account and let compound interest work for you.
How it Works
Our compound interest calculator uses the standard formula FV = PV(1+r/n)^(nt) plus the future value of regular contributions to project how your wealth will grow over time. Enter your initial investment, monthly contribution, expected annual return, investment horizon, and compounding frequency.
The power of compound interest lies in earning returns on your returns. As your balance grows, each compounding period generates more interest than the last. This exponential growth becomes dramatic over long time horizons, which is why starting early is the single most important factor in building wealth.
The growth chart shows your total portfolio value broken down into contributions and interest earned. Watch how the interest portion grows relative to your contributions over time — this visual demonstrates why patience and consistency are key to long-term investing.
Adjust the compounding frequency to see the difference between annual, quarterly, monthly, and daily compounding. While more frequent compounding yields slightly better results, the biggest drivers of your final balance are your contribution rate, time horizon, and average return.
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. It causes your money to grow exponentially over time, often called the 'eighth wonder of the world.'
How does compounding frequency affect my returns?
More frequent compounding (daily vs annually) results in slightly higher returns because interest is calculated and added to your balance more often. However, the difference between monthly and daily compounding is usually minimal.
What is the Rule of 72?
The Rule of 72 is a quick way to estimate how long it takes to double your money. Divide 72 by your annual interest rate. At 7% return, your money doubles in approximately 10.3 years.
How much should I invest monthly?
A common guideline is to invest 10-20% of your income. Even small regular contributions benefit enormously from compounding over long periods. Starting early matters more than investing large amounts later.
Is 7% a realistic annual return?
Historically, global stock markets have returned around 7-10% per year on average before inflation. However, past performance does not guarantee future results, and returns vary significantly year to year.
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