Compound Interest Calculator
Calculate how your investments will grow with compound interest over time
Calculate Compound Interest
Starting amount of your investment
Annual percentage yield (APY)
Number of years to invest
Additional months (0-11)
Twelve times per year
Investment Results
Interest Breakdown
Principal Breakdown
Formula used: FV = P × (1 + r/n)^(n×t)
Where: P = Principal ($1,000.00), r = Annual rate (8.00%), n = Compounding frequency (monthly), t = Time (20 years)
Investment Analysis
Example Calculation
Classic Investment Example
Initial Investment: $1,000
Annual Interest Rate: 8%
Investment Period: 20 years
Compounding: Monthly (12 times per year)
Calculation
FV = $1,000 × (1 + 0.08/12)^(12×20)
FV = $1,000 × (1.006667)^240
FV = $1,000 × 4.9268
Final Balance = $4,926.80
Total Interest = $3,926.80
Year-by-Year Growth
| Year | Balance | Interest |
|---|---|---|
| 1 | $1,083.00 | $83.00 |
| 2 | $1,172.89 | $172.89 |
| 3 | $1,270.24 | $270.24 |
| 4 | $1,375.67 | $375.67 |
| 5 | $1,489.85 | $489.85 |
| 6 | $1,613.50 | $613.50 |
| 7 | $1,747.42 | $747.42 |
| 8 | $1,892.46 | $892.46 |
| 9 | $2,049.53 | $1,049.53 |
| 10 | $2,219.64 | $1,219.64 |
| 11 | $2,403.87 | $1,403.87 |
| 12 | $2,603.39 | $1,603.39 |
| 13 | $2,819.47 | $1,819.47 |
| 14 | $3,053.48 | $2,053.48 |
| 15 | $3,306.92 | $2,306.92 |
| 16 | $3,581.39 | $2,581.39 |
| 17 | $3,878.65 | $2,878.65 |
| 18 | $4,200.57 | $3,200.57 |
| 19 | $4,549.22 | $3,549.22 |
| 20 | $4,926.80 | $3,926.80 |
Compounding Frequency Impact
Based on current inputs. Higher frequency = higher returns.
Investment Tips
Start investing early to maximize compound growth
Higher compounding frequency increases returns
Regular additional deposits accelerate growth
Even small interest rate differences matter over time
Consider tax implications in your calculations
Understanding Compound Interest
What is Compound Interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. This creates exponential growth as your earnings generate their own earnings.
Simple vs. Compound Interest
- •Simple Interest: Calculated only on the principal amount
- •Compound Interest: Calculated on principal + accumulated interest
- •Compound interest grows exponentially over time
Compound Interest Formula
FV = P × (1 + r/n)^(n×t)
- FV: Future Value (final amount)
- P: Principal (initial amount)
- r: Annual interest rate (as decimal)
- n: Number of compounding periods per year
- t: Time in years
Einstein reportedly said: "Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn't, pays it."
Compounding Frequency Impact
The frequency of compounding significantly affects your returns. More frequent compounding leads to higher returns: