Compound Interest Calculator
Calculate how your money grows with compound interest. See the power of compounding with regular contributions and different compounding frequencies.
Growth Summary
Future Value
$300,851
Total Interest
$170,851
131% return
Initial Investment
Monthly Contributions
Interest Rate & Time
Growth Over Time
Year-by-Year Breakdown
| Year | Start | Contrib. | Interest | End Balance |
|---|---|---|---|---|
| 1 | $10,000 | $6,000 | $919 | $16,919 |
| 2 | $16,919 | $6,000 | $1,419 | $24,339 |
| 3 | $24,339 | $6,000 | $1,956 | $32,294 |
| 4 | $32,294 | $6,000 | $2,531 | $40,825 |
| 5 | $40,825 | $6,000 | $3,148 | $49,973 |
| 6 | $49,973 | $6,000 | $3,809 | $59,782 |
| 7 | $59,782 | $6,000 | $4,518 | $70,299 |
| 8 | $70,299 | $6,000 | $5,278 | $81,578 |
| 9 | $81,578 | $6,000 | $6,094 | $93,671 |
| 10 | $93,671 | $6,000 | $6,968 | $106,639 |
Showing first 10 of 20 years
Compounding Frequency Impact
| Frequency | Future Value | Total Interest | Difference |
|---|---|---|---|
| Annually | $284,670 | $154,670 | - |
| Quarterly | $297,755 | $167,755 | +$13,085 |
| Monthly | $300,851 | $170,851 | +$16,181 |
| Daily | $302,374 | $172,374 | +$17,704 |
The Power of Starting Early
$106,639
After 10 years
+$36,639 interest
$300,851
After 20 years
+$170,851 interest
$691,150
After 30 years
+$501,150 interest
Quick Answer
Compound interest is interest earned on both your initial principal and accumulated interest. Use the formula A = P(1 + r/n)^(nt) where P is principal, r is annual rate, n is compounding frequency, and t is years. Our calculator at practicalwebtools.com shows exactly how your money grows with different rates, terms, and contribution schedules.
Key Facts
- Compound interest formula: A = P(1 + r/n)^(nt)
- Einstein allegedly called compound interest "the eighth wonder of the world"
- Daily compounding yields slightly more than monthly or annual compounding
- $10,000 at 7% for 30 years grows to $76,122 with no additional contributions
- Adding $200/month to that scenario grows it to $307,000+
- The Rule of 72: Divide 72 by interest rate to estimate doubling time
- Starting 10 years earlier can double your retirement savings
Frequently Asked Questions
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. Unlike simple interest, compound interest grows exponentially because you earn interest on your interest. This is why it's often called the "eighth wonder of the world."
More frequent compounding leads to higher returns. Daily compounding produces slightly more than monthly, which produces more than annual. For example, $10,000 at 5% for 10 years yields $16,289 with annual compounding vs $16,470 with daily compounding.
The Rule of 72 is a quick way to estimate how long it takes to double your money. Divide 72 by your interest rate to get the approximate years. At 6%, your money doubles in about 12 years (72/6=12). At 12%, it doubles in about 6 years.
Time is the most powerful factor in compound interest. Starting 10 years earlier can nearly double your final amount. A $500/month investment at 7% for 40 years grows to $1.2M, but for only 30 years, it's just $567K - less than half.
APR (Annual Percentage Rate) is the simple interest rate without compounding. APY (Annual Percentage Yield), also called effective annual rate, includes compounding and shows the actual yearly return. APY is always equal to or higher than APR.
Growth Summary
Future Value
$300,851
Total Interest
$170,851
131% return