Compound interest is interest on interest. It is the reason long-term savings and investments grow faster each year, and the reason debts can grow quickly when they are not repaid.
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Open Compound Interest CalculatorThe formula
Final amount = P x (1 + r / n)^(n x t), where P is the start amount, r is the yearly rate as a decimal, n is how many times per year interest is added and t is the number of years. 10,000 at 10% for 2 years, added yearly, becomes 12,100.
Simple versus compound
Simple interest is always calculated on the first amount only. On 10,000 at 10% for 2 years it gives 2,000. Compound interest gives 2,100, because the second year earns interest on the first year's interest. Over 20 or 30 years the gap becomes huge.
How to use the calculator
- Enter the start amount, yearly rate and number of years.
- Choose how often interest is added.
- Read the final amount, the interest earned and the comparison with simple interest.
Time beats rate
A smaller amount invested early often ends higher than a larger amount invested late. The rule of 72 gives a rough idea: divide 72 by the yearly rate to get the years needed to double your money. At 8%, that is about 9 years.
Limits of the calculator
- It does not include taxes, fees or inflation.
- It assumes the same rate for the whole period.
- It does not include regular monthly deposits.
Frequently asked questions
Does monthly compounding matter much?
It gives a bit more than yearly compounding. The difference grows with the rate and the years.
Can I use it for loans?
Yes, to see how an unpaid balance grows, but use the EMI calculator for regular loan payments.
Is my data stored?
No.
Ready to start?
Open Compound Interest Calculator