Compound Interest Calculator
See how your investment grows over time with compound interest. Add optional monthly contributions and choose your compounding frequency.
Investment Summary
Principal vs Interest
Year-by-Year Breakdown ▼
How Does Compound Interest Work?
Compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods. This creates exponential growth over time, as your earnings generate their own earnings — often described as "interest on interest."
The Compound Interest Formula
The formula used is: A = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) - 1) / (r/n)], where P is the principal, r is the annual interest rate (decimal), n is the compounding frequency per year, t is the number of years, and PMT is the regular monthly contribution.
Compounding Frequency Explained
- Annually: Interest is added once per year
- Semi-Annually: Interest is added twice per year
- Quarterly: Interest is added four times per year
- Monthly: Interest is added twelve times per year
- Daily: Interest is added every day (365 times per year)
More frequent compounding leads to slightly higher returns, as interest begins earning interest sooner. However, the difference between monthly and daily compounding is typically small for most investments.
Tips for Maximizing Compound Growth
- Start investing as early as possible — time is the most powerful factor
- Make regular contributions to accelerate growth
- Reinvest all dividends and interest rather than withdrawing them
- Even small increases in your contribution amount can have a large impact over decades