Compound Interest Calculator

Compound interest is interest earned on both your original principal and on interest you've already earned. Each time interest is added to your balance, future interest is calculated on that larger amount, so growth accelerates over time compared with simple interest, which is only ever calculated on the original principal.

For a lump sum, future value equals principal times (1 + rate per period) raised to the number of periods: FV = P × (1 + r)^n. Regular contributions are calculated separately with the future value of an annuity formula and added to the lump-sum growth. This calculator converts your nominal annual rate and chosen compounding frequency into the correct periodic rate automatically.

More frequent compounding applies interest to your balance more often, so each dollar of interest starts earning its own interest sooner. The difference between daily and monthly compounding is usually small — a few dollars a year on a typical savings balance — but the gap widens with higher rates and longer time horizons.

The Rule of 72 is a quick estimate for how many years it takes an investment to double: divide 72 by the annual interest rate. At 8% annual growth, money roughly doubles in 72 ÷ 8 = 9 years. It's a mental-math shortcut, not an exact formula — this calculator computes exact figures.

Yes, slightly. A contribution made at the start of a period earns interest for that whole period, while an end-of-period contribution doesn't earn interest until the next one. Over many years, start-of-period ('annuity due') contributions produce a modestly higher balance than the same contributions made at the end of each period.

The rate you enter is the nominal annual rate. APY (annual percentage yield) is the effective rate you actually earn in a year once compounding is applied — it's always equal to or higher than the nominal rate, and the gap grows with more frequent compounding. Banks are required to advertise APY so savings rates can be compared on equal footing.

The future value is your account balance in future (nominal) dollars. The real value divides that by expected inflation over the same period, showing what those future dollars would be worth in today's purchasing power. A growing balance can still lose real value if its growth rate doesn't outpace inflation.

Even a modest annual increase, such as raising your contribution 3% a year to match a typical raise, can meaningfully boost your ending balance over 20–30 years, because the extra contributions compound for a long time. Use the 'annual contribution increase' field under Advanced to model this.

Compound interest works the same way whether you're saving or borrowing. On savings and investments it grows your balance in your favor. On credit cards and other compounding debt, it works against you, growing what you owe if you don't pay it off — which is why high-interest debt is usually worth paying down aggressively.

This calculator applies your entered rate exactly and consistently, so the math itself is precise. Real-world returns fluctuate year to year, and average results can differ substantially from a smooth, constant rate — treat long-term projections as an illustration of how compounding works, not a guarantee of what you'll actually earn.