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Compound Interest Calculator - Investment Growth Calculator

Free compound interest calculator to see how your investments grow over time. Calculate future value with monthly contributions, different compounding frequencies, and tax effects.

Compound Interest Calculator

See how your money grows over time with the power of compounding

TL

The starting amount you're investing.

TL

Amount you'll add each month. Can be 0.

%

Expected annual return rate.

How often interest is calculated and added to principal.

yil

How many years will you keep the money invested?

%

Tax on investment gains. Varies by account type and country.

Investment Results

Enter your values to see results

and click the "Calculate" button

What is Compound Interest?

Compound interest is often called 'interest on interest' - your earnings generate their own earnings. When you earn interest, it gets added to your principal, and the next period's interest is calculated on this larger amount. Over time, this creates exponential growth. Albert Einstein reportedly called it 'the eighth wonder of the world.' Understanding compound interest is essential for building long-term wealth through investing and saving.

How to Use This Calculator

  1. Enter your initial investment amount
  2. Add any regular monthly contributions (optional)
  3. Set your expected annual interest rate
  4. Choose how often interest compounds
  5. Enter your investment time horizon in years
  6. Optionally add tax rate on gains
  7. Click Calculate to see your future value

Compound Interest Formula

A = P(1 + r/n)^(nt)

Where A = Future Value, P = Principal, r = Annual Rate (decimal), n = Compounding Frequency, t = Years. With monthly contributions: A = P(1+r/n)^(nt) + PMT × [((1+r/n)^(nt) - 1) / (r/n)]

Frequently Asked Questions

What's the difference between simple and compound interest?
Simple interest is calculated only on the original principal. Compound interest is calculated on principal PLUS accumulated interest. Over long periods, compound interest generates dramatically more returns. For example, $10,000 at 7% for 30 years: Simple = $31,000, Compound = $76,123.
How often should interest compound?
More frequent compounding means higher returns. Daily compounding beats monthly, which beats annual. However, the difference is relatively small (about 0.25% between annual and daily for a 7% rate). Focus more on the interest rate and investment period than compounding frequency.
What is the Rule of 72?
A quick mental math trick: divide 72 by your interest rate to estimate years to double your money. At 6% it takes 12 years, at 8% it takes 9 years, at 12% it takes 6 years. It's approximate but useful for quick planning.
How does compound interest work against me with debt?
The same principle that grows investments makes debt grow faster. Credit card debt at 20% APR compounds against you. A $5,000 balance can become $12,000+ in 5 years if unpaid. Always pay off high-interest debt before investing.
Should I invest a lump sum or monthly contributions?
Mathematically, lump sum investing usually wins because money in the market longer has more time to compound. However, monthly contributions (dollar-cost averaging) reduce risk and are more achievable for most people. Consistent monthly investing is better than waiting to save a lump sum.
How do taxes affect compound interest?
In taxable accounts, annual taxes on gains create 'tax drag' reducing compounding. Tax-advantaged accounts (401k, IRA) let money compound tax-free or tax-deferred, significantly boosting long-term growth. A Roth IRA allows tax-free withdrawals in retirement.
What's a realistic interest rate to expect?
Historical S&P 500 returns average about 10% annually (7% after inflation). High-yield savings accounts offer 4-5%. Bonds typically 4-6%. Be skeptical of promises above 12-15% - higher returns usually mean higher risk or scams.
How long should I invest to see compound interest benefits?
Compound interest really accelerates after 7-10 years. The 'hockey stick' growth curve becomes dramatic after 15-20+ years. For retirement, start in your 20s or 30s to maximize compounding time. Even 5 years earlier can mean 30-40% more money at retirement.
What is APY vs APR?
APR (Annual Percentage Rate) is the simple interest rate. APY (Annual Percentage Yield) includes compounding effect - it's your actual return. A 7% APR compounded monthly = 7.23% APY. Always compare APY when evaluating savings accounts or investments.
Can compound interest make me rich?
Compound interest is a wealth-building tool, not a get-rich-quick scheme. $500/month at 7% for 30 years = $566,765. It requires patience, consistency, and time. The earlier you start and the longer you invest, the more powerful compounding becomes.

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