Compound Interest Calculator
See how your money grows with the power of compound interest. Add regular contributions to maximize your results.
How Compound Interest Works
Compound interest is often called the eighth wonder of the world. Unlike simple interest, which is calculated only on your principal, compound interest is calculated on your principal plus any interest you've already earned. This creates a snowball effect where your money grows faster and faster over time.
The key variables are the principal (starting amount), interest rate, compounding frequency, and most importantly — time. The longer your money compounds, the more dramatic the growth. A 7% annual return compounded monthly turns $10,000 into over $40,000 in 20 years without adding a single dollar.
Adding regular monthly contributions supercharges this effect. Even modest contributions of $100-200 per month can add tens of thousands to your final balance over a 20-30 year period.
When choosing savings accounts or investments, look for higher annual percentage yield (APY), which accounts for compounding frequency. A 5% APY compounded daily beats a 5.05% rate compounded annually in practice.