What is compound interest?

Compound interest is the interest calculated on the initial principal and also on the accumulated interest from previous periods. It's essentially 'interest on interest' that can significantly accelerate investment growth over time.

How often should interest compound for maximum growth?

More frequent compounding generally results in higher returns. Daily compounding typically provides the best results, followed by monthly, quarterly, semi-annually, and annually. However, the difference becomes less significant at lower interest rates.

Compound Interest Calculator

Calculate how your savings and investments grow with the power of compound interest. See the impact of regular contributions and different compounding frequencies on your financial future.

Investment Details

Initial Investment ($)

Annual Interest Rate (%)

Time Period (Years)

Investment Results

Final Amount

Interest Earned

Total Contributions

Rate of Return

Yearly Breakdown

Year	Starting Balance	Contributions	Interest	Ending Balance

Understanding Compound Interest

Compound interest is often called the "eighth wonder of the world" because of its incredible power to grow wealth over time. Unlike simple interest, which only calculates interest on the principal amount, compound interest calculates interest on both the principal and the accumulated interest from previous periods.

The key factors that affect compound interest are:

Principal: The initial amount invested
Interest Rate: The annual percentage rate of return
Time: The length of time the money is invested
Compounding Frequency: How often interest is calculated and added
Regular Contributions: Additional investments made over time

The earlier you start investing and the more frequently interest compounds, the more dramatic the growth becomes. This is why starting early, even with small amounts, can lead to significant wealth accumulation over time.

Frequently Asked Questions

Important Disclaimer

This calculator is for educational and planning purposes only. Actual investment returns may vary due to market conditions, fees, taxes, and other factors. Past performance does not guarantee future results. Please consult with a qualified financial advisor before making investment decisions. The calculations assume a constant rate of return, which is not realistic in actual market conditions.