Calculate how your savings or investments grow over time with compound interest. Add regular contributions, compare compounding frequencies, and visualize your growth with an interactive chart. Everything runs in your browser -- nothing is sent to a server.
Last updated: March 2026 | Free to use, no signup required
| Year | Starting Balance | Contributions | Interest Earned | Ending Balance |
|---|
Compound interest is interest calculated on both the initial principal and on the accumulated interest from previous periods. It differs from simple interest, where you only earn interest on the original amount. The key idea is that your interest earns interest, creating a snowball effect over time.
Say you deposit $1,000 at 5% annual interest compounded yearly. After the first year, you earn $50 in interest, bringing your total to $1,050. In the second year, you earn 5% on $1,050 instead of the original $1,000. That gives you $52.50 in interest. The extra $2.50 comes from compounding -- interest earned on the prior year's interest.
Over short periods the difference seems small. Over decades it becomes enormous. This is why compound interest is sometimes called the eighth wonder of the world, a phrase often attributed to Albert Einstein (though the attribution is disputed). The point stands regardless: compounding is the single most powerful force in personal finance.
The standard compound interest formula for a lump sum investment is:
Where:
When you add regular contributions (PMT), the formula extends to include the future value of an annuity:
This second part calculates what your recurring deposits grow to when each one also earns compound interest. The calculator above uses this complete formula, adjusted for contribution timing. If contributions happen at the beginning of each period rather than the end, each payment gets one extra compounding cycle.
Interest can compound at different intervals: daily, monthly, quarterly, semi-annually, or annually. The more frequently interest compounds, the more you earn, because each compounding event adds interest to the principal sooner.
Consider $10,000 at 6% annual interest over 10 years with no additional contributions:
The difference between annual and daily compounding is about $312 on a $10,000 deposit. That gap grows much larger with bigger principals and longer time horizons. For a $100,000 deposit over 30 years at 6%, the difference between annual and daily compounding exceeds $14,000.
In practice, most savings accounts compound daily, while many bonds and CDs compound semi-annually. Knowing the compounding frequency helps you compare offers accurately. This calculator lets you switch between frequencies to see exactly how each one affects your outcome.
Simple interest pays a fixed amount based only on the original principal. If you invest $10,000 at 5% simple interest for 10 years, you earn exactly $500 per year, totaling $5,000 in interest and $15,000 overall.
With compound interest at the same rate (compounded monthly), that same $10,000 grows to $16,470.09 over 10 years -- earning $6,470.09 in interest. That is nearly $1,500 more than simple interest. Over 30 years, the gap becomes massive: simple interest yields $25,000, while compound interest (monthly) yields $44,677.44.
The practical takeaway: always choose compound interest when saving or investing. And when borrowing, understand that compound interest works against you. Credit card debt, for example, compounds daily on unpaid balances. The same math that builds wealth on the savings side erodes it on the debt side.
Start by entering your initial deposit in the Principal Amount field. This is the money you have available right now, or the starting balance you want to project from.
Set the Annual Interest Rate to match your expected return. For a high-yield savings account, that might be 4-5%. For a stock market index fund, historical averages suggest around 7-10% before inflation. Be realistic - using an inflated rate will give you misleading projections.
Choose the Compound Frequency that matches your account. Most savings accounts use daily compounding. Bonds often use semi-annual. If you are not sure, monthly is a reasonable default.
Set the Time Period using years and months. Even a small change in time horizon can dramatically affect results due to the exponential nature of compounding.
If you plan to make regular deposits, fill in the Contribution Amount and choose the frequency. Toggle between End of Period and Beginning of Period to model when your deposits happen. Beginning-of-period contributions earn slightly more because they get compounded for one extra cycle.
Use the Compare Two Rates button to see how different interest rates would affect your outcome side by side. This is useful when choosing between two savings products or when modeling optimistic versus conservative return scenarios.
The Rule of 72 is a quick mental shortcut for estimating how long it takes an investment to double. Divide 72 by your annual interest rate, and you get the approximate number of years to double your money.
At 6% interest: 72 / 6 = 12 years to double. At 8%: 72 / 8 = 9 years. At 12%: 72 / 12 = 6 years.
This rule is surprisingly accurate for rates between 2% and 15%. It breaks down at very high or very low rates, but for typical investment returns it gives you a useful ballpark. Use it to quickly evaluate whether an investment opportunity is worth a deeper look.
You can also reverse the formula. Want to double your money in 5 years? You need 72 / 5 = 14.4% annual return. That immediately tells you it requires a fairly aggressive investment strategy.
Compound interest shows up everywhere in personal finance. Retirement accounts like 401(k)s and IRAs rely on decades of compounding to turn modest monthly contributions into substantial nest eggs. Someone who starts investing $500 per month at age 25 (at 7% annual return) will have over $1.2 million by age 65. Waiting until age 35 to start the same contributions yields only about $567,000. Those 10 extra years of compounding nearly double the final amount.
Mortgage amortization runs on compound interest too, which is why the early years of a mortgage payment go mostly toward interest rather than principal. Credit card companies use daily compounding on unpaid balances, which is part of why minimum payments barely dent the principal.
On the corporate side, compound interest determines bond pricing, loan structures, and the time value of money calculations that drive business decisions. Understanding it is not just useful for personal savings -- it is foundational to finance as a whole.
Start as early as possible. Time is the single largest factor in compound growth. Even small amounts invested in your twenties outperform larger amounts invested in your forties because of the additional compounding periods.
Reinvest your returns. Compounding only works when interest or dividends stay invested. If you withdraw your earnings, you are effectively converting compound interest back into simple interest. Set dividends to reinvest automatically whenever possible.
Make regular contributions. The formula above shows that recurring deposits dramatically increase your final balance. Set up automatic transfers so contributions happen without you having to remember.
Minimize fees. A 1% annual fee might seem small, but it compounds against you over time. On a $100,000 portfolio earning 7% over 30 years, a 1% annual fee costs you over $130,000 in lost growth. Choose low-cost index funds and fee-free accounts when available.
Choose accounts with frequent compounding. Daily compounding earns more than monthly, which earns more than annual. When comparing accounts with similar rates, the one with more frequent compounding gives a slightly better return.
Avoid withdrawing early. Every dollar you pull out loses all future compounding potential. Build a separate emergency fund so you never need to tap your long-term investments.
Simple interest is calculated only on the original principal amount. Compound interest is calculated on the principal plus all previously accumulated interest. Over time, compound interest produces significantly higher returns because each interest payment becomes part of the base that earns future interest. For example, $10,000 at 5% over 20 years yields $10,000 in simple interest but $16,532.98 in compound interest (compounded monthly).
Use the compounding frequency that matches your specific account or investment. Most savings accounts and money market accounts compound daily. CDs often compound daily or monthly. Bonds typically compound semi-annually. If you are calculating a general projection and do not know the exact frequency, monthly compounding is a reasonable middle-ground assumption.
The S&P 500 has returned an average of about 10% annually before inflation since its inception, or roughly 7% after adjusting for inflation. Many financial planners use 7% as a reasonable long-term estimate for diversified stock portfolios. For more conservative projections, use 5-6%. Keep in mind that actual returns vary year to year, and past performance does not guarantee future results. This calculator shows a smooth growth curve, while real investments fluctuate.
This calculator shows nominal growth without accounting for taxes or inflation. To approximate after-inflation returns, subtract the expected inflation rate (historically about 2-3% in the US) from your interest rate before calculating. For tax effects, the impact depends on your account type. Contributions to tax-advantaged accounts like 401(k)s and Roth IRAs grow tax-free or tax-deferred, so the calculator's output closely matches reality for those accounts.
This setting controls when each contribution is added relative to the compounding period. End of period (ordinary annuity) means the deposit is made at the end of each interval, so it does not earn interest until the next period. Beginning of period (annuity due) means the deposit is made at the start, giving it one extra compounding cycle. Beginning-of-period contributions produce a slightly higher final balance because each deposit earns interest for one additional period.
This calculator uses the standard compound interest formula with future value of annuity calculations, which is the same math used by banks and financial institutions. The results are mathematically precise for the inputs given. However, real-world returns are never perfectly constant -- stock markets fluctuate, savings rates change, and you may miss contributions. Use the results as a projection tool to understand growth potential, not as a guarantee of exact future balances.
Yes. This calculator runs entirely in your web browser using JavaScript. No data is transmitted to any server, no information is stored, and no cookies are set. You can verify this by opening your browser's developer tools and checking the Network tab while using the calculator. Your financial inputs never leave your device.