Compound interest calculator

Compound interest means earning interest on your interest. Over long periods it makes a dramatic difference, which is why starting to save early matters so much. This calculator shows the future value of an investment or savings account, the total contributed and the interest earned, for any compounding frequency and optional regular contributions.

How to use it

1. Enter the starting principal.
2. Enter the annual interest rate and the number of years.
3. Choose the compounding frequency: yearly, quarterly, monthly or daily.
4. Optionally add a monthly contribution.
5. Read the future value, total contributions and total interest.

The formula

Without contributions: FV = P × (1 + r/n)^(n × t), where P is the principal, r the annual rate as a decimal, n the number of compounding periods per year and t the number of years. Regular contributions add the future value of an annuity on top.

Worked example

10,000 at 7% compounded monthly for 20 years grows to 10,000 × (1 + 0.07/12)^240 = 40,387. Adding 200 per month brings the total to about 144,573, of which 58,000 are your own contributions and the rest is interest.

Useful rules of thumb

• Rule of 72: divide 72 by the annual rate to estimate doubling time. At 8%, money doubles in about 9 years.
• More frequent compounding helps, but less than people expect: 7% compounded daily instead of yearly adds only about 0.25 percentage points of effective annual yield.
• Fees and inflation compound too. A 1% annual fee can consume a large part of long-term growth.