Compound Interest Calculator
See how your savings or investment grows over time with the power of compounding.
Frequently Asked Questions
What is compound interest?
Compound interest is interest calculated on both your initial principal and the accumulated interest from previous periods. Unlike simple interest (calculated only on the principal), compound interest causes money to grow exponentially — often called "interest on interest." This is why starting to save early makes such a dramatic difference over decades.
How often should interest compound for maximum growth?
The more frequently interest compounds, the faster your money grows. Daily compounding produces the highest returns, followed by monthly, quarterly, and annually. In practice, the difference between daily and monthly compounding is small at typical savings rates — a $10,000 deposit at 5% for 10 years earns $6,487 with daily compounding vs. $6,470 with monthly compounding.
What is the Rule of 72?
The Rule of 72 is a quick mental shortcut: divide 72 by your annual interest rate to estimate how many years it takes to double your money. At 6% annual interest, your money doubles in approximately 72 ÷ 6 = 12 years. At 9%, it doubles in 8 years. This only applies to compound interest, not simple interest.
Does adding monthly contributions make a big difference?
Yes — dramatically so. A $10,000 initial deposit at 7% for 20 years grows to about $38,700. But adding just $200/month on top of that grows it to over $144,000. Regular contributions combined with compound interest is the core of most long-term wealth-building strategies like 401(k) or pension plans.