Compound Interest Calculator
What is Compound Interest?
Compound interest is interest earned on both your original money and the interest it has already generated. Over time this creates exponential growth - the famous "interest on interest" effect that makes investing early so powerful. This compound interest calculator shows exactly how your investment grows with monthly contributions.
Enter your initial investment, how much you add each month, an expected annual return and a time horizon. The calculator assumes monthly compounding and shows your future value, how much you actually put in, and how much came purely from compounding. Common long-term planning rates are 6-8% for stock index funds.
Frequently Asked Questions
What is the formula for compound interest?
A = P(1 + r/n)^(nt) for a lump sum, where P is principal, r is the annual rate, n is compounding periods per year and t is years. With regular monthly contributions, the future value formula adds a payment term: PMT × ((1 + i)^m - 1) / i.
How often is interest compounded?
It depends on the account. Savings accounts typically compound daily or monthly, CDs can compound monthly or quarterly, and investments grow continuously in theory. More frequent compounding means slightly more growth, since interest is added to your balance sooner.
How long does it take to double my money?
Use the Rule of 72: divide 72 by your annual return. At 7%, money doubles roughly every 10.3 years; at 10%, about every 7.2 years. The Rule of 72 is a quick estimate, not an exact calculation.