Compound Interest Calculator
See how your savings or investment grows over time with the power of compound interest.
What is Compound Interest?
Compound interest is the process of earning interest on both your original principal and on the interest you've already earned. Unlike simple interest — which only ever earns on the initial deposit — compound interest builds on itself each period, creating an exponential growth curve rather than a straight line. This "interest on interest" effect is what makes long-term investing so powerful, and why starting early matters so much more than starting with a large amount.
Albert Einstein is often (if apocryphally) quoted as calling compound interest the "eighth wonder of the world." Whether he said it or not, the sentiment is correct: given enough time, even modest returns compound into significant wealth.
How Compounding Frequency Affects Growth
The more frequently interest is compounded, the faster your money grows — though the difference between daily and monthly compounding is smaller than most people expect. Here's how it works: if you invest $10,000 at 8% annually, the result after 10 years differs depending on frequency:
- Annually: approximately $21,589
- Quarterly: approximately $21,911
- Monthly: approximately $22,020
- Daily: approximately $22,054
Monthly compounding is the most common for savings accounts, CDs, and investment accounts. Daily compounding is used by some high-yield savings accounts. The effective annual rate (EAR) shown in the results accounts for compounding frequency and gives you a true apples-to-apples comparison between accounts.
The Rule of 72
The Rule of 72 is a quick mental shortcut for estimating how long it takes an investment to double. Simply divide 72 by the annual interest rate: at 8% per year, your money doubles roughly every 9 years (72 ÷ 8 = 9). At 6%, it takes about 12 years. At 12%, only 6 years. This rule works best for rates between 2% and 30%.
Use this calculator alongside the Rule of 72 to see exactly how many years your specific scenario takes to double, and what the actual dollar value looks like year by year.
How to Use This Compound Interest Calculator
Enter your initial investment (the lump sum you're starting with), your monthly contribution (the regular amount you'll add — set to $0 if you're not adding regularly), the annual interest rate, and the time period in years. Select your compounding frequency and click Calculate Growth.
The year-by-year table shows you exactly how the balance grows annually — including how much of the total comes from your own deposits versus how much was earned through interest. The gap between those two lines is pure compound interest.
Why Monthly Contributions Matter So Much
Regular contributions dramatically amplify the effect of compounding. On $5,000 invested at 8% for 20 years with no additional contributions, you'd finish with about $23,300. Add just $200 per month and the result jumps to over $118,000 — the monthly contributions alone account for $48,000 of deposits, but the compound growth turns it into a much larger sum. Small, consistent contributions over long periods outperform large one-time investments made later.