Compound Interest Calculator

Q: What is compound interest?

Interest earned on both your original principal and on previously earned interest. Each period's interest joins the balance, so the next period's interest is calculated on a larger amount — growth accelerates over time rather than staying linear.

Q: What is the compound interest formula?

A = P(1 + r/n)^(nt), where P is the starting principal, r the annual rate as a decimal, n the number of compounding periods per year, and t the years. $10,000 at 5% compounded monthly for 10 years grows to $16,470.

Q: How often should interest compound for the best return?

More frequent is better, but the difference is smaller than people expect: $10,000 at 5% for 10 years yields $16,289 compounded annually, $16,470 monthly, and $16,487 daily. The rate and the time matter far more than the frequency.

Q: What is the Rule of 72?

A mental shortcut for doubling time: divide 72 by the annual return percentage. At 8%, money doubles in about 72 ÷ 8 = 9 years; at 6%, about 12 years.

See what your money becomes when interest earns interest — with optional monthly contributions and a year-by-year growth table.

Future balance

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Total contributed

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Interest earned

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Growth multiple

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Year	Contributions to date	Interest to date	Balance

The compound interest formula

A = P × (1 + r/n)^n·t

P — starting principal · r — annual rate (decimal) · n — compounding periods per year · t — years

With regular deposits, each contribution starts its own compounding clock; the calculator sums them all (a "future value of an annuity" on top of the lump sum).

Worked example

$10,000 at 5% compounded monthly for 10 years:

A = 10,000 × (1 + 0.05/12)¹²⁰ = 10,000 × 1.6470 = $16,470

Add $200/mo and the total reaches about $47,530 — of which $34,000 is money you put in and $13,530 is interest.

Why starting early beats saving more

Compounding rewards time disproportionately. At 7%, $300/mo invested from age 25 to 65 grows to roughly $790,000; starting at 35 yields about $367,000 — waiting ten years costs more than half the outcome, even though only a quarter less money was contributed. This is the engine behind every retirement projection and the reason the "eighth wonder of the world" nickname stuck. The Rule of 72 gives you the intuition: 72 ÷ rate ≈ years to double. At 8%, your money doubles every 9 years — four doublings in a 36-year career turns $1 into $16.

Compounding frequency: how much does it matter?

Frequency ($10,000 at 5%, 10 yrs)	Result
Annually	$16,289
Quarterly	$16,436
Monthly	$16,470
Daily	$16,487

Daily vs. annual compounding is worth about 1.2% over a decade — real, but tiny next to a 1-point difference in the rate itself. Chase rate and time, not frequency.

Frequently asked questions

What is compound interest?

Interest earned on principal and on prior interest — so growth accelerates instead of staying linear.

What is the compound interest formula?

A = P(1 + r/n)^nt. $10,000 at 5% monthly for 10 years → $16,470.

How often should interest compound for the best return?

More often is better but marginal — rate and time dominate. See the table above.

What is the Rule of 72?

72 ÷ annual return ≈ years to double. 8% → ~9 years.

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Note: Assumes a constant rate and end-of-month contributions; real returns vary. Not financial advice. Last reviewed: July 2026.