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Compound Interest Calculator — Watch Your Money Grow

Calculate compound interest over time with monthly contributions. See how your investment grows year by year with the power of compounding.

What is this calculator?

A compound interest calculator estimates the future value of an investment by applying interest on both the initial principal and accumulated interest from previous periods. It uses the formula A = P(1 + r/n)^(nt) to compute growth with optional regular contributions.

Formula

The core formula is A = P(1 + r/n)^(nt), where A is the final amount, P is the principal, r is the annual interest rate (decimal), n is the number of compounding periods per year, and t is the number of years. For monthly contributions, the future value of a series formula is added: FV = PMT × [((1 + r/n)^(nt) - 1) / (r/n)].

Example

If you invest $10,000 at 5% annual interest compounded monthly for 10 years with no additional contributions, the final amount is $10,000 × (1 + 0.05/12)^(12×10) ≈ $16,470.09. The total interest earned is $6,470.09.

How to use

  1. 1Enter the initial principal amount (e.g., $10,000), the annual interest rate (e.g., 5%), the number of years (e.g., 10), and select the compounding frequency (annually, quarterly, monthly, or daily). Optionally, add a monthly contribution amount.
  2. 2When you click Calculate, the tool applies the compound interest formula with the chosen compounding frequency and any monthly contributions. It computes the final balance, total contributions, and total interest earned.
  3. 3The results show the final amount (principal + contributions + interest), total contributions (principal plus any monthly deposits), and total interest earned. You can compare different scenarios by adjusting inputs.

Frequently Asked Questions

What is the difference between simple interest and compound interest?
Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus accumulated interest. For example, $10,000 at 5% simple interest over 10 years yields $5,000 interest, but compounded monthly yields about $6,470 interest.
How does compounding frequency affect the final amount?
More frequent compounding results in higher returns because interest is added more often. For $10,000 at 5% over 10 years: annually yields $16,288.95, quarterly $16,453.09, monthly $16,470.09, and daily $16,474.61.
Can I use this calculator for loans as well as investments?
Yes, the same formula applies to loans where interest compounds. However, for loans, the result represents the total amount owed. This calculator does not account for loan payments; it assumes no withdrawals.
What does 'Total Contributions' mean in the output?
Total Contributions is the sum of the initial principal and all monthly contributions made over the investment period. For example, if you start with $10,000 and add $100 monthly for 10 years, total contributions = $10,000 + ($100 × 120) = $22,000.
Is there a standard authority for compound interest calculations?
The compound interest formula is universally accepted in finance and mathematics. The U.S. Securities and Exchange Commission (SEC) provides educational resources on compounding, and the formula is used by banks and financial institutions worldwide.

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