Compound Interest Calculator
See how your money grows with compound interest. Adjust compound frequency to model annual, monthly, or daily compounding scenarios.
About this Calculator
See how your money grows with compound interest. Adjust compound frequency to model annual, monthly, or daily compounding scenarios.
Formula & Calculations
Formula
A = P(1 + r/n)^(n×t)Where:
- A=Final amount after compound interest
- P=Principal (initial investment)
- r=Annual nominal interest rate (as a decimal)
- n=Number of compounding periods per year
- t=Time in years
Assumptions
- Assumes no additional contributions beyond the initial principal.
- Assumes the nominal interest rate remains constant for the full term.
- Effective annual rate calculation uses the formula EAR = (1 + r/n)^n - 1.
Calculation Examples
Example 1
Compounded annually, $10,000 grows to $16,288.95 over 10 years at 5%.
Example 2
Monthly compounding at 4% over 20 years grows $5,000 to $11,112.99. The effective annual rate is 4.07% due to monthly compounding.
Example 3
Daily compounding at 3.5% over 15 years nearly doubles the initial investment.
Frequently Asked Questions
How does compounding frequency affect my returns?
The more frequently interest is compounded, the higher your total return. Daily compounding yields more than monthly, which yields more than quarterly, which yields more than annual compounding — even at the same nominal rate. This is because each compounding period earns interest on previously credited interest.
What is the Rule of 72?
The Rule of 72 is a quick way to estimate how long it takes money to double at a given interest rate. Divide 72 by the annual interest rate: at 6%, money doubles in roughly 12 years (72/6 = 12). It works best for rates between 6% and 10%.