What is compound interest?
Compound interest means you earn interest on your original money and also on the interest you already earned. Over a few years the effect is small. Over decades it becomes the main driver of growth, which is why starting early matters so much.
Simple interest, by contrast, is paid only on the original amount and grows in a straight line.
How to use this calculator
- Enter your starting balance and any monthly deposit.
- Enter the expected annual interest rate and the number of years.
- Choose how often interest compounds: annually, semi-annually, quarterly, monthly or daily.
- Press Calculate to see the future value, total deposits, interest earned and a yearly table.
The compound interest formula
For a single deposit, A = P x (1 + r/n)^(n x t), where P is the principal, r is the annual rate, n is how many times interest compounds per year and t is the number of years. With monthly deposits, this calculator applies the growth month by month and adds each deposit at the end of the month.
Example: 10,000 at 7% for 10 years compounded annually grows to about 19,672. Compounded monthly it reaches about 20,097.
The rule of 72
A quick way to estimate how long it takes to double your money is to divide 72 by the annual rate. At 7%, money doubles in roughly 72 / 7 = 10.3 years. The calculator shows this number as a sanity check.
Tips to get more from compounding
- Start as early as possible. Time matters more than the exact rate.
- Deposit regularly, even small amounts, and increase them when your income grows.
- Compounding frequency helps a little, but the rate and the number of years matter far more.
- Remember that inflation, fees and taxes reduce your real return, so a result in today's money will be lower than it looks.
Growth of 10,000 at 7% a year (compounded annually)
| Years | Balance | Interest earned |
|---|---|---|
| 10 years | 19,672 | 9,672 |
| 20 years | 38,697 | 28,697 |
| 30 years | 76,123 | 66,123 |
Frequently Asked Questions
How does compound interest work?
Interest is added to your balance, and the next interest payment is calculated on the larger balance. This repeats every period.
Does compounding more often make a big difference?
Only a small one. Going from annual to monthly compounding adds a little. The rate and the time matter much more.
What interest rate should I use?
Use the rate your bank or fund quotes. For investments, returns vary, so try several rates rather than relying on one.
When are the monthly deposits added?
At the end of each month in this calculator.
Does it include tax or inflation?
No. Both reduce your real gain, so treat the result as a before-tax, before-inflation estimate.
Is my data stored?
No. The calculation runs in your browser, so the numbers you enter are not sent to our server.