Compound Interest Calculator
Calculate how your investment grows with compound interest over time.
Final Amount
$20,097
Interest Earned
$10,097
Total Return
100.97%
Initial Principal
$10,000
Growth over time
How your investment grows with compound interest
| Year | Balance | Interest This Year | Total Interest |
|---|---|---|---|
| 1 | $10,723 | $723 | $723 |
| 2 | $11,498 | $775 | $1,498 |
| 3 | $12,329 | $831 | $2,329 |
| 4 | $13,221 | $891 | $3,221 |
| 5 | $14,176 | $956 | $4,176 |
| 6 | $15,201 | $1,025 | $5,201 |
| 7 | $16,300 | $1,099 | $6,300 |
| 8 | $17,478 | $1,178 | $7,478 |
| 9 | $18,742 | $1,264 | $8,742 |
| 10 | $20,097 | $1,355 | $10,097 |
How to use this compound interest calculator
This compound interest calculator shows exactly how your investment grows over time. Enter your principal amount, set your expected annual interest rate, choose how often interest compounds, and set your time period. Results update instantly as you type or adjust the sliders.
The formula used is A = P(1 + r/n)^(nt), where P is the principal, r is the annual rate, n is the compounding frequency, and t is time in years. The more frequently interest compounds, the faster your investment grows due to interest earning interest on itself.
Use the year-by-year growth table to see your balance at each milestone. The chart visualizes the exponential curve that makes compound interest so powerful — especially over long time horizons. Compare daily vs. annual compounding to see how frequency affects your final balance.
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, which only earns on the original amount, compound interest causes your balance to grow exponentially over time. This 'interest on interest' effect is why Albert Einstein reportedly called compound interest the eighth wonder of the world.
How is compound interest calculated?
The compound interest formula is A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the annual interest rate (as a decimal), n is the number of times interest compounds per year, and t is the time in years. For example, $10,000 at 7% compounded monthly for 10 years gives A = 10,000 × (1 + 0.07/12)^(12×10) ≈ $20,097.
What is the difference between compound and simple interest?
Simple interest is calculated only on the principal — you earn the same dollar amount of interest each year. Compound interest earns interest on both the principal and previously earned interest, causing exponential growth. On $10,000 at 7% for 10 years: simple interest gives $17,000, while monthly compounding gives $20,097 — a difference of over $3,000 from the same rate and principal.
How often should interest compound for maximum growth?
More frequent compounding always produces higher returns, though the difference narrows as frequency increases. Daily compounding yields slightly more than monthly, which yields slightly more than quarterly. For most practical purposes, the difference between daily and monthly compounding is small — for $10,000 at 7% over 10 years, daily compounds to about $20,136 vs. $20,097 monthly. The interest rate and time horizon matter far more than compounding frequency.
What is a good interest rate for investments?
Historically, the S&P 500 has averaged about 10% annually before inflation, or roughly 7% after inflation. High-yield savings accounts currently offer 4–5%, while bonds typically return 3–6%. For long-term retirement planning, a real (inflation-adjusted) return of 5–7% is commonly used as a conservative projection. The exact 'good' rate depends on your investment vehicle, risk tolerance, and time horizon.
How long does it take to double money with compound interest?
The Rule of 72 gives a quick estimate: divide 72 by your annual interest rate. At 7%, money doubles in roughly 72 ÷ 7 = 10.3 years. At 10%, it doubles in about 7.2 years. At 4%, it takes about 18 years. This rule works because of the mathematical properties of exponential growth and is accurate within a percentage point for rates between 1% and 20%.
What is the Rule of 72?
The Rule of 72 is a mental math shortcut for estimating how long it takes an investment to double at a fixed compound annual rate. Simply divide 72 by the interest rate: at 6%, it takes 12 years; at 8%, about 9 years; at 12%, about 6 years. The rule also works in reverse — to find what rate is needed to double money in a given number of years, divide 72 by the number of years.
How does compound frequency affect my returns?
Compounding frequency determines how often earned interest is added back to your principal. Annual compounding adds interest once a year; monthly adds it 12 times; daily adds it 365 times. Each addition creates a slightly larger base for the next calculation. For a $10,000 investment at 7% over 20 years: annually compounds to $38,697, monthly to $40,001, and daily to $40,255. The higher the rate and longer the time horizon, the bigger the gap between frequencies.