liminfoCompound Interest Calculator
Free web tool: Compound Interest Calculator
Final Amount
31,998,323
Total Invested
22,000,000
Total Interest
9,998,323
| Year | Balance | Total Invested | Total Interest |
|---|---|---|---|
| Year 1 | 11,739,505 | 11,200,000 | 539,505 |
| Year 2 | 13,568,005 | 12,400,000 | 1,168,005 |
| Year 3 | 15,490,056 | 13,600,000 | 1,890,056 |
| Year 4 | 17,510,442 | 14,800,000 | 2,710,442 |
| Year 5 | 19,634,195 | 16,000,000 | 3,634,195 |
| Year 6 | 21,866,603 | 17,200,000 | 4,666,603 |
| Year 7 | 24,213,226 | 18,400,000 | 5,813,226 |
| Year 8 | 26,679,906 | 19,600,000 | 7,079,906 |
| Year 9 | 29,272,786 | 20,800,000 | 8,472,786 |
| Year 10 | 31,998,323 | 22,000,000 | 9,998,323 |
About Compound Interest Calculator
The Compound Interest Calculator is a free, browser-based financial planning tool that helps savers, investors, and personal finance enthusiasts understand the long-term power of compound growth. Enter your initial principal, annual interest rate, investment period, compounding frequency, and optional monthly deposits to instantly see your projected final amount, total deposited, and total interest earned.
The tool implements the standard future value formula for both lump-sum principal and regular contributions. For the principal, FV = P * (1 + r/n)^(n*t), where P is the initial amount, r is the annual rate, n is compounding periods per year, and t is the number of years. For monthly deposits, the annuity future value formula is used and scaled to match the selected compounding frequency. This accurately models scenarios where you invest a fixed amount every month (e.g., a monthly savings plan or dollar-cost averaging into an index fund).
The calculator generates a year-by-year growth table showing the account balance, cumulative deposits, and cumulative interest for each year of the investment period. This breakdown makes it easy to visualize how the proportion of interest relative to deposits grows over time — the core illustration of how compounding accelerates in the later years. Five compounding frequencies are supported: annually, semi-annually, quarterly, monthly, and daily.
Key Features
- Future value calculation for initial principal using FV = P(1 + r/n)^(nt)
- Monthly deposit annuity future value formula scaled to compounding frequency
- Combined total: principal FV + deposits FV = total final amount
- Year-by-year table: balance, cumulative invested, and cumulative interest per year
- Five compounding frequencies: annually, semi-annually, quarterly, monthly, daily
- Displays total deposited vs. total interest earned to show the impact of compounding
- Handles any investment horizon from 1 to any number of years
- Real-time recalculation as any input changes
Frequently Asked Questions
What is compound interest and how does it differ from simple interest?
With simple interest, you earn interest only on the original principal. With compound interest, you earn interest on both the principal and the accumulated interest from previous periods. Over long time horizons, this creates exponential growth. For example, at 7% annual simple interest, $10,000 grows to $17,000 after 10 years. At 7% compound interest, it grows to approximately $19,672.
How does compounding frequency affect the final amount?
More frequent compounding means interest is added to the principal more often, which slightly increases the effective annual rate. Daily compounding produces the highest final amount, while annual compounding produces the lowest. The difference between monthly and daily compounding is usually small, but the gap between annual and monthly compounding can be meaningful for large amounts over long periods.
How are monthly deposits handled in the formula?
Monthly deposits are converted to a per-period deposit (monthly amount * 12 / compounding_frequency) and treated as an ordinary annuity. The future value of regular deposits is: FV = D * ((1 + r/n)^(n*t) - 1) / (r/n), where D is the deposit per compounding period. This is then added to the principal future value to get the total final amount.
What is the Rule of 72?
The Rule of 72 is a quick mental estimate of how long it takes to double your money at compound interest. Simply divide 72 by the annual interest rate. For example, at 6% interest, your money doubles in approximately 72 / 6 = 12 years. At 9%, it doubles in about 8 years. This rule gives an intuitive feel for the power of compound growth.
What compounding frequency do banks and investments typically use?
Savings accounts often compound daily or monthly. Certificates of deposit (CDs) may compound daily, monthly, or quarterly. Index fund and stock investments do not compound in the same way — gains accumulate as unrealized returns until sold, but reinvested dividends create a similar compound effect. Bonds typically pay semi-annual coupons, which can be reinvested.
How does inflation affect compound interest calculations?
This calculator uses nominal interest rates, not real (inflation-adjusted) rates. To find the real rate of return, subtract the annual inflation rate from the nominal rate. For example, if your account earns 5% and inflation is 3%, your real return is approximately 2%. For long-term planning, using a real rate helps you understand the actual purchasing power of your future savings.
What is dollar-cost averaging and how does it relate to monthly deposits?
Dollar-cost averaging (DCA) means investing a fixed amount at regular intervals regardless of market conditions. The monthly deposit feature in this calculator models DCA into an investment earning a fixed return. In practice, market returns are variable, but this calculator helps illustrate the approximate effect of consistent contributions over time.
How long does it take for compound interest to become significant?
Compound interest becomes visibly powerful over time. In the early years, interest earnings are modest. But by the middle and later years, interest earned often exceeds the total deposits made in those same years. The year-by-year table in this calculator directly shows when the cumulative interest surpasses the cumulative deposits — the inflection point of compound growth.